Financial Independence

adirondack jakeMy friend Paul recently asked me to define Financial Independence.  I gave Paul my short version and promised to expand in an upcoming blog post.  Here we go…

To me financial independence is when you have enough money coming from sources other than your job to support your desired lifestyle.  You can live “independent” of your day job paycheck.  You may love what you do and choose to go to work anyway, but knowing that you don’t have to will free you from the stress and worries that the paycheck to paycheck employee often feels.  Your monthly bills may be paid by dividends from stocks that you’ve invested in, rental income from real estate that you own, or distributions from a small business that you own.  The important thing is that the sources of income don’t require your day to day involvement to continue paying you.  The freedom that comes from investment income is freedom of time.  You have complete freedom to choose how you spend the limited resource called time.

I haven’t arrived at full independence yet, but I’m working toward it…how about you?

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