7 Stages of Financial Freedom
ฝัง
- เผยแพร่เมื่อ 4 มิ.ย. 2024
- Financial freedom isn't a destination. It's a journey. And in this video, I'll take you through the seven stages of financial freedom so you can start your own journey today.
Timecodes:
0:00 - Intro
1:19 - Stage 1
2:14 - Stage 2
3:20 - Stage 3
4:08 - Stage 4
5:30 - Stage 5
6:55 - Stage 6
8:18 - Stage 7
► www.latestarterfire.com/
------------
LINKS:
► Get My Weekly Newsletters: www.financialtortoise.com/new...
► Favorite Books: www.financialtortoise.com/bes...
DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
![[4K] TREASURE(트레저) “KING KONG” Band LIVE Concert 킹콩은 라이브를 찢어🦍 [it’s KPOP LIVE 잇츠라이브]](http://i.ytimg.com/vi/p8bLLOxPDD8/mqdefault.jpg)
Stage 1: Emergency Fund $1,000 in savings
Stage 2: Pay off all debts except for mortgage (use snowball method)
Stage 3: Save 3-6 months of emergency savings
Stage 4: have one years of expenses saved/invested (F.U. Money)
Stage 5: Five years of annual expenses saved/invested
Stage 6: Ten years of annual expenses
Stage 7: 25x your annual expenses (4% rule)
Thx, Danny.
Given the rocky / layoff-heavy economy, I switched Step 2 and 3. Built 6 month emergency fund FIRST. Now paying off some debts. Feels like the right choice for me as I can breathe easier if any layoffs happen
this is almost what ramsey tells you to do lol
Back in 1996 me and my x wife watched a tv show on Dave Ramsey.
Even though we divorced…we’re both now multimillionaire’s. I would say that watching that show that night, changed our mindset in the right direction.
34 years old and I just hit stage 6. I have about 11x my annual expenses saved. Onward to 25x!
Saved!? Or invested? I hope you don’t have 11x income sitting in a savings account 😅
@@Dr.Dumpnpump Invested in low fee index funds, of course. Now up to 12x annual expenses.
@@Mr._Du Nice! I’m all for an emergency fund but that would be a bit ridiculous. I have about the same but I’ve decided to go the individual stock route, I’m young enough to take the risk and I genuinely enjoy the hunt. Good luck!
@@Dr.Dumpnpump the maverick of wall street check him out
me too, I'm 31.
I thought I really liked you. Then I saw you were a fellow vet. Now I REALLY like you.
Same 🤣 fellow vet here
After watching this video, I am actually proud of myself. I am in my late 40s and have reached stage 5 with no investing, only with savings and frugality. Watching your videos has given me the confidence to start investing and hopefully by the time I retire, I would have reached stage 7. Thank you for your videos and I will definitely check out your friend's site.
I'm 43 and at stage 3; I live below my means, don't have a car note, and I participate in my employer pension and 403b. My student loan debt is minimal due to working at a college for the tuition waiver. I'm not where I want to be, but I'm working on it! Good video and insightful 👌 👍
43 and still paying student loans is nauseating, but good on you for educating yourself
For the first time since 2004 I'm 100% debt free. It does take major self control, sacrifice and re-prioritizing. Stress is way down, sleep is much more restful, mental health is greatly improved and overall the intangible aspects of life and happiness is all up. Now I'll just have to be smart moving forward from here.
Age 32 this month, stage 4. Hoping to hit stage 5 and start coastFI at 35!
I'm not even yet on stage 1 😞 however I have progress in savings at least :) Good thing I don't have debt
Needed to say that I started following you a few weeks back and watch about a new video from this page daily. All that to say that I am a huge fan - beyond informational and practical - and confirmed that I’m doing alright in life and yet, the golden tidbits of information shared here have helped me 10x my perspectives on money & financial goals. Keep up the good work and thank you for serving your community in more ways than one. Currently hovering between stage 4 and 5 and more motivated now to keep pushing!
Appreciate you shouting out Dave Ramsey. He's literally the reason I'm where I'm at. Been following him for 10 years, it works and this video is solid info.
It's definitely worth repaying high interest debt first!
Thanks for the helpful and well organized video.
Surprised to see that I am at Stage 4 at 40. I have 4 years worth of annual expenses saved, working toward five, so I am not far off of Stage 5. Since I only started becoming serious with my finances over the last few years it is interesting to learn that I am slightly better off than I thought.
Very informative breakdown of the 7 stages of financial freedom. Each stage provides a clear roadmap, making it easier to set and achieve financial goals. A valuable resource for those on the journey to financial independence.
Currently stage three; 28 years old. I do still have student loan debt ($4.5k left at 2.1% interest), but that should be paid off early at the beginning of next year. I'm investing about 30% of my income, and plan to retire when I am around 50.
I have known 4 millionaires personally. All of them were men of faith who prioritized God, family and serving a higher purpose. All of which is easier when you are financially free!
Stage 6 investable $. Not including pension or social security. Now I need to hang onto it.
I did the pay down approach for my student loans but I tackled them from highest interest rate to lowest. From a financial point of view, this saves more money than not prioritizing by interest rate and should take less time to pay them all off since you’re reducing the overall interest rate on your debt over time and hence the final amount you’ll need to pay to get debt free.
Avalanche!
I want financial freedom by 25-27 . I’m 20 years old I’ll come back to this video If get to that age and update
Where you at
@@darkeuropa7100k still 20
One of my favorite youtubers! You make really great content and I am not only speaking about this video. Greetings from Yucatan!
That emergency fund should really be held in a high yield savings account. you won't see returns that match the market, but the interest generated will at least negate some of the purchasing power lost to inflation.
Im 25 and Channel my Career 2 times and i think i will do it so often as i want. We have a good Education Here and i think it will be normal in the Future
Thanks for your service
Hi Tae, I’ve been loving your content.
I can’t stop watching your videos. I’ve just started investing by my self and fired my stock broker and now I’m doing it by my self I opened my account with Vanguard I went for a 60/40 2 fund portfolio with VAS and VGS would you say this is a good start for the long term
I didn’t know you were a vet! Former 11b here, love your vids!
Early 30s. We skipped step 2 since it was purely his student debt and we were going with the yours-mine-ours fund management. Close to finishing step 4 while paying down step 2.
Love your channel ❤️...I shared your videos with My 12 years old daughter!
I recently found your channel, thanks for the great videos!
I'm 54 and just got laid off late last year. But I'm at stage 5 so I have time to find another job. But since I'm 54, I can't access my 401k without penalty for another 5 years. My 401k would give me stage 7... So I'm still job hunting even after 100+ applications.
Have you found any since?
You should include your 401k when calculating which stage you are in
Not true. The IRS was sued over this 30 years ago, and lost. But, they were able to set the rules for how to draw from it after 50. One of the rules put in place is that a financial advisor CANNOT tell you that you can make withdrawals, but if you press them the have to confess that you can take out cash without any penalty. So, go see your advisor face to face, and they will admit you can take out cash (with some limitations). Best wishes for your job hunt.
Thank you!
This is really cool. I'm further along than I thought... my partner and I are in between Stage 4 and Stage 5!
I am too! See you at Stage 5 in a few years :)
Thanks, for the tip.
Thanks for the perspective. How do you account for life-time pensions that more than cover all your living expenses?
Personally Stage 4 (no house and living with parents). My family on the other hand collapsed down to Stage 1 after my dad went bankrupt. Can't afford to be mad, I can only try my best.
I am really enjoying the content you are releasing. What do you think about utilizing Robinhood for beginners purchasing VTI?
I'm 19 and am almost at Stage 3. I'll be at stage 5 before my 21st birthday.
Not including mortgage. For I will be buying Land and commercial real estate before I purchase my own home.
I'm in stage 4 at the age of 22, this year I'm finishing my degree and starting to work in summer, luckyly in Spain we have public universities so it was the government who paid for my education. Also my field of studies is economics so the imvesting thing has been an advantage for me.
Which of your videos talks about your portfolio recommendations for investing over age 60? I am probably in Stage 6 (maybe 7 but likely 6) and I am interested in your ideas. Thanks. Great videos and great advice. Easy to understand. I have recommended your channel many, many times. Currently, I am in Schwab and use their intelligent portfolios. I do have some "loose" money that I would like to control myself in the market but look forward to how you would invest after 60. thanks again.
Stage 5 at 27 years old (thanks God).
"A simple 10% annual return" lol
It’s actually pretty simple if you look at index funds and S&P 500 overall history.
@@TylerRayHamblinhistory does not equal future returns. There is a HUGE probability we don’t see 10% annual returns over the next 40 years, unless AI makes the world perfect
@@user-se1le6di1cyou're right all of a sudden it's different now
I have averaged more than that In the last 10 years.
@@stevencoffland103its not a guarantee though. That’s the point..
Excellent video.
great video Tae!!!
4th stage at 26 years, living in Ukraine (two years of full scale war now), so it's hard to know for sure about ANYTHING in the future, but I still save and invest.
good luck man, even the worst of the situations can get turned up
I reached level 6 in my late 30s. Currently, I could go on for ~15 years without working. Hopefully, I will be at level 7 in the next 3 years.
It feels great! Especially the FU feeling that was mentioned in the video 😂
I still work, but only because I want to…
@@alibekkuanyshbek4538
It’s a good job, but nothing exceptional (when it comes to salary).
I moved to Poland (I’m Polish-American) and the COST of living here is much MUCH lower than in the US. That allows me to save A LOT and invest.
I would suggest paying off loans and credit cards on a daily recurring basis ❤
my gaol is stage 2 with 25-30k in a savings account this will be the day I will feel extremely financially great.
Should you focus on paying off car loan if the APY is small (~3%) before having the 3-6 month emergency fund? Or start saving for the 3-6 months while keeping the low interest loan?
Very good insights . Hats off. Countrywise we need to see PPP (purchasing power parity) also for the $1000 mentioned in the video.
As per liquid assets I am at stage 6. If I include my unsold additional house then it is stage 7.
It took me some sacrifices, commitment, family support, savings & investments of eight years to achieve it. Please read and implement "from the rat race to financial freedom" by Manoj Arora for additional insights.
One important point is that you kept everything, even in late stages, as a fixed annual expense. This helps with the mentality required to not inflate your lifestyle.
I am very grateful that we can find great educational videos on TH-cam nowadays. I really appreciate your efforts making these videos. subbed and liked ! a fellow creator ~~~
You're very welcome!
Great video. One thing mentioned was to keep 3-6 month of expenses (stage 3) in checking account. I suppose it depends, but wouldn’t it be more optimal to keep this in a liquid high yield savings account?
tip: if you reduce your monthly expenses, you'll reach 6 months (or 1 year or 10 years) of living expenses quicker. Do you really need Netflix, TH-cam Premium and Disney+?
Great video.
Your job is taxed at the highest tax bracket than investments in most cases.
I’m at 25x so I passed all of these stages, and I want to travel the world, but I can’t seem to quit my job because I work at a hedge fund and make over $500k/yr.
Basically, I make so much that I can’t justify leaving. If there’s a Great Depression and I lose most of my net worth, I’ll have to crawl back to a job but it would be very difficult to get my comp back to this level after taking so much time off.
So I continue to work. If I pad my nest egg to 5M I think it will give me enough of a buffer to never have to work again even after a Great Depression.
Jesus dude, just pay me 48k/yr and I'll show you how to save 404k per year. Do that for a few years, put your money in an index fund and you and I will never *have* to work another day in our lives and can pursue work that's actually fulfilling to us
@@erikbudrow1255 you don’t understand. Continuing to work but spending every paycheck is still infinitely more fun than retiring then living with the anxiety that I have to live off of whatever my net worth is now. Imagine thinking of different ways to blow $10,000 every weekend for the rest of your life. That’s what my life is like right now, except I’m stressed out for 50hr a week at work. Blowing through $10k every weekend is insanely fun. So I’m continuing to live the high stress high fun lifestyle while my health can take it.
When you count "investments," do you include retirement (401k, IRA) in this calculation?
I like adding another fun milestone when your money starts contributing as much to retirement as you do. Say you contribute 10k a year in 7 to 8 years time at 10% interest your money will be working as hard as you for contributing to retirement
Great vid 👍
Thank you for making this brief and very informative video. When we talk about one year of income saved, does that include 401K pr retirement saving ? If so, then I dont feel safe with a layoff with just one year's income in the retirement account. If I use 50% of that money, I am pushed back several years for retirement savings. Could you clarify ? Also, does it make sense to save in a large unregistered invesment acccount, without putting my retirement savings to the max ?
I don't understand 2 things:
When you speak of 25x annual expense in the investment, is it taking into account also value of the real estate you have (even though it's less liquid then stocks)
2) Not having a debt except for mortgage - when I want to buy 50k car where the interest rate is 5%, but I need to use a cash from my stock portfolio, that can give me 10% in avg (last year it was 25%). Why would it be advantegous pay the car in cash and to not having a debt?
This is a matter of personal preference, but the 5% car loan interest you will pay no matter what, but the 8-10% average stock market return is not guaranteed.
Yes, on average, holding the stocks will outperform, but if we go into a depression and the market loses 70% one year, and you lose your job, it will be difficult to have that extra 5% on your car payments.
Lastly, unless it’s in a Roth, you’re going to have to pay capital gains taxes on your stock gains which makes those numbers much closer.
Why do people recommend 3-6 months cash saved in a CHECKING account!? High interest yield savings accounts are a real thing, and sometimes even beat inflation. That money is also very accessible with a simple transfer if you have a checking account with the bank you have the high yield savings at. 3-6 months salary/expenses worth of cash sitting in a checking account is losing its purchasing power due to inflation.
38. working on Step6
This really only works from the perspective of someone trying to achieve FIRE/Early retirement. As you start approaching 62, it's really incomplete math to not include social secuirty (even if you're going to defer to 70) because you can spend into your principle until you reach the point of SS distribution, and then the combined amounts are what you really need. And for someone expecting a pension, that's even more money not consider by a pure portfolio perspective.
I personally expect both social security and a pension so this 7 stage analysis is way overkill for me.
For me personally my student debt isn't much of a liability. I pay around $65 each month with 1% interest for 25 years. I'm okay with that (Sweden)
I think the debt thing is more nuanced. For example why would I pay off my car early if the interest is low. I think debt is a useful tool if used correctly. It might be that for most people the easiest way is to just have such simple rules for debt though.
Don't know about the USA, but in India buying a health & life insurance on your own is the most important thing else we are just 1 hospital bill away from poverty!
Sweet ballistic helmet tae…. Video on ammo and training budget ?
Budget is $0. That was uncle sam's property.
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. A trader made over $350k in this recession influenced market..
Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are alot of wealth transfer in this downtime if you know where to look.
The best course of action if you lack market knowledge is to ask a consultant or investing coach for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, even though I know it sounds obvious or generic. I believe that is the most effective way to enter the business at the moment.
Nope. Should have used the "Avalanche" method to pay off debt. Instead of getting warm fuzzy feelings, you get dollars. And couple it with the "Transfer" method: Take out a new credit card with 0% interest for an introductory period, transfer the amount of money that you can pay off before the 0% interest ends, and pay the 3% to 5% (depending on how long the 0% lasts). (Be sure to allow for the fee in your payoff amount calculations.)
Old Navy? Gap? Banana Republic? Why not start at Goodwill?
The 4% Rule is designed with a 30-year time horizon in mind. If you retire at a pretty young age, say Age 55, you could possibly outlive your retirement savings.
Dividends might be better to rely on primarily before tapping into your principal. More buffer.
The 4% rule was based on a 30 year timeline. Not being able to withdraw 4% a year in perpetuity.
When you go through these stages you're talking about funds that are accessible vs 401k and other retirement accounts?
I would think so
I'm only at stage 3 right now. I have a few months of emergency savings and no debt, but I don't have much invested yet. It seems difficult to find money to put aside for investing.
I don't think you should underestimate how significant that is. That means you're not bleeding money on interest payments, which a lot of people are (and your interest is someone else's returns), so you can slowly start investing money in your own returns. Doesn't have to go insanely fast, build whatever you can with whatever you can put aside. The biggest factor in investing is time, and if you're at this point now, even with slower but regular investments, you'll position yourself to be in a far better position in 10 years from now. Keep at it man, you're doing great!
Don't let people bragging about being further along get you down. Stage 3 is further along than like 95% of people man! You're doing amazing!! If your company has a 401K match, make sure you're getting all of it. Another helpful tool is most contribution platforms have the ability to set a target contribution % and slowly up the level over time so it doesn't feel as painful. This lets your budget slowly adjust to the increasing contribution %.
i'm stage 7 at age 29, but i don't know what i want. i don't want to leave my high paying job. so at this point im just coasting, taking no shit. but not i thought FIRE would be. guys, i know this is a lux problem, but please think about what you REALLY want. you want to find out before you reach stage 7
I am starting old I dont think i hit the 15 before I retire but wont mean I won't try lol. but to me finanice freedom doesnt even need that 25 times. i live cheap i dont make 6 figures either so cut all that in half or even less plain to pay house of like ramsey says to so technically I could probbaly drop that yearly min needed to be comfortable to 25k not 100k lol.
yeah. for me it would be a destination, and then I finally could start to live my own life.
(Update after I watch the whole vid)
Age 30s, stage 6
Good idea, but very simple to say 10% return average... Very risky
Stage 1 - $1,000 emergency fund
Stage 2 - No debt (except home)
Stage 3 - 3-6 months expenses emergency fund
Stage 4 - 1 year expenses (saved & invested)
Stage 5 - 5 years expenses (saved & invested)
Stage 6 - 10 years expenses (saved & invested)
Stage 7 - 25x annual expenses invested
2 & 3
For your steps 4-7, are you talking about taxable accounts or money locked away in retirement accounts? I'm in my 30s now and have enough in my 401k and IRA that I could get away with never putting another penny in it and should still be a couple million by the time retirement rolls around. But that is still 30 years away.
I’m on stage 8
I agree with everything but the 25x rule. It ignores that you will be getting Social Security and/or other pension funds. It also assumes that you will never touch principal, which is especially untrue for folks who are 65+ and can safely draw down their investments.
Basically the Ramsey baby steps!
Ohh I have more than 25x of Annual expenses invested in market. I'm financial free but I'm not satisfied.
You can switch from stage 5 to 6 just cutting your expenses by half :D
Stage 7. 56 yrs old.. Wasn't hard to achieve really.
🙏
My investments are making 75k per year as a minimum ❤
I’m 43 and not married with no kids ❤😮
Debt was invented to buy assets that generate money. It's main purpose is to help company buy stuff to make more money. So unless your buying a property to generate revenues it's probably a terrible idea to get debt.
Stage 3 save 6 months life expense in high yield savings !!!
Right, but what about how post ww2 to 2019 was the greatest growth in history. I’m not sure we live in the world of endless growth anymore
People weren’t sure after 2008 either. Time will tell I guess.
Man you sound like "Reverse Tech Lead". You have a very similar voice but you talk about completely different things and have different attitude about life.
I'm on Step 5. I technically am Step 6 with 1 Million but most of my wealth is stuck in the house.
The prolonged market downturn will be permanent.
Yeah I'm not entering the stock market. I'm just fine with owning my own house without any debt and saving 70% of my salary.
Enjoy 2% gains on your cash
scary part is that having 1k in my savings means i am better off than what 75 percent of americans that is sad. even sadder when I make belowe the average income lol
Not even on stage 1 😅
Banana republic
i guess, stage 5 max 6 should be enough for everybody
"what happened to Gap?" 🤣
What to do at 65 living off a decent nest egg without investments other than a house….