Finding the map

asian signsYesterday, Monday, we paid off our mortgage. It was our only debt.

It’s strange that something abstract, like being debt-free, feels exciting. But it’s a very good feeling. We paid off a 30 year mortgage in about six years. Not being beholding to anyone is liberating.

Being debt-free is a huge piece of the financial independence map. The other big piece is saving up 25 times your yearly spending is. You can do it by socking away lots of dough, or by cutting back on what you want – or some mix of the two.

I’ve always had a good financial compass. It pointed to areas like spending less than I earned, saving as much as possible, and reducing  overhead expenses. Sometimes my compass was counter to popular culture, especially ideas like being child-free, driving the same car for years, and investing in indexed stock funds.

The financial compass got me pretty far. What I didn’t have was the map. A big part of the map was finding out about saving toward 25 times your yearly spending and investing it in a low-cost indexed stock fund. And the other big part of the map, being able to withdraw 4% from it each year, year after year.

Years ago I read “Your Money Or Your Life” which got me considering whether an expense is worth it or not. It validated the compass I had. But I didn’t know about the 4% withdrawal concept until a while after that. And the 25 times concept was a fairly recent discovery.

There’s more to it than these broad brush strokes but that’s the gist of financial independence. The best entrance to the rabbit hole for this stuff is here. It’s worth your time.