How hacking away at the unessential reveals the path to financial independence.
By Brad Beckstrom
I thought I’d always been good with money, but in 2008, things were starting to hit the shitter. Stock market declines were on their way to a 40% drop. Real estate was headed in the same direction. I was running a small business and weaving my way through the craziness.
Just like I learned in 2000, there’s not much you can do about paper losses. In fact, the more investment moves you make during a correction or bear market, the more damage you can do. It’s far better to be prepared and have a strategy, before a bear market, helping you avoid bad decisions.
Why am I talking about 2000 and 2008 in 2018? Well, we know that recessions and bear markets come along with some regularity. Now is the best time to make sure you’re prepared for the next market decline. The good news is there are only a few very important steps in this process.
- Track every dollar that comes into and goes out of your life.
- Give yourself a pay cut and invest the difference every month.
- Build up a 1 year emergency fund that allows you to ride out the storm, and avoid selling off investments.
I was fortunate enough to stumble across the book “Your Money or Your Life” around 1993. After reading it a couple times, I had a deep understanding of the importance of tracking my expenses and investments with the end goal of financial independence. A few years later, I upgraded my computer and received a demo copy of Quicken. The difference between Quicken and some other home budgeting applications at the time was the availability of downloads from both my bank and my brokerage. This was a game changer for me. I’d been far too lazy to enter transactions in the past and absolutely hated reconciling my checking account. Read more…