Retiring early from the workforce is possible, but it requires a ton of work.
I personally know of a few people who have done it and it’s inspired me to do the same.
The one interesting thing I observed is a lot of them have various sources of passive income.
Some have a large portfolio of dividend investments. Others have multiple multi-family real estate properties. And some of them run a successful business.
The other thing I noticed from people who have retired early is they set goals (very specific financial goals). Most of them achieved some level of financial independence by age 30 – 40.
That really got me thinking…about what I should be doing to get my life on that track! Well, here’s what I came up with.
Here are 5 must have financial goals by 30 in order to retire early:
1. Passive income covers rent/mortgage
Generating passive income is the key to achieving early retirement. Net worth just doesn’t cut it; you need stone cold hard cash flow.
These days, I’m doing everything I can to generate passive income. I’m investing all of my active income into passive income.
In addition, I’m trying a bunch of different side hustles to generate passive income. To be honest, it’s kind of fun! I’ve failed a lot but I’ve also had some success.
I think one goal everyone should have is to generate enough passive income to cover your rent/mortgage. This is an incredible feeling.
I reached this level about a year ago. And guess what? I feel great! My budget was really never that tight, but being able to cover my rent without relying on my day job felt like a big accomplishment.
Don’t know where to get started to generate passive income?
Well here are some ideas:
- Write eBooks
- Sell erotica
- Build an online course
- Start a niche website
- Start a blog
- Invest in real estate
- Build an Etsy business
I’ve tried six of these ideas so far over the past two years with varying degrees of success. Even if you fail I’m confident you’ll learn a lot!
2. Start a side hustle ASAP
Starting a side hustle is incredibly important to reach early retirement. Often times, your day job just won’t cut it. Besides, do you really want to depend on someone to work for? They could fire you at any moment!
Plus, being an introvert, I hate the dreaded annual performance review to beg for a raise. It’s just not a process that I particularly enjoy!
Next time you want a raise, get a side hustle! All you have to do is work hard and you’ll likely succeed. You don’t have to ask anyone to determine or validate your worth anymore!
A side hustle will do wonders for your self confidence and financial situation. One side hustle can truly change your quality of life (and I’m speaking from personal experience here)!
Even if you’re making an extra $300 a month that could be the difference between retiring at age 50 or age 45. Small income streams add up over time and are often more valuable than you think!
Don’t know where to begin? Focus on what you know/do best!
If you are a yoga teacher, you can post videos and courses online, offer lucrative corporate programs, or even build a yoga retreat business!
The first step is identifying what you’re good at and then finding out how to monetize it!
3. Pay down debt
If you’re going to retire early, pay down all of your debt. By age 30, you should no longer have student loans, credit card debt, or car loans.
Debt is very risky. You definitely don’t want debt to compromise your early retirement. That’s why getting a side hustle is very important.
A side hustle can bring in extra money every single month. Even if its only $200 or $300 every month, it could make a huge impact on your ability to pay down debt.
Most credit card debt charge interest rates of 15%+. It’s hard to save any money with that kind of a fire in your wallet!
4. Start dividend investing
Dividend investing is a very powerful way to reach early retirement. The strategy is simple: invest in stocks that can pay and increase dividends over multiple decades.
The ability to INCREASE dividends is really key here. Investing in stocks that increase dividends every year is like getting a raise every single year!
Take Microsoft (MSFT) for instance. In 2011 Microsoft paid a quarterly dividend of $0.20. In 2017, it paid a $0.42 quarterly dividend, a 110% increase!
If you invested in Microsoft stock six years ago your dividend income would have more than doubled without buying another share. This is the incredible power of dividend investing!
Now, dividend investing doesn’t get you rich quick. However, it does provide a very stable source of income.
Don’t think you have enough money to start investing? Well, I would encourage you to still invest even if its $100 or $200 a month.
When it comes to investing, the earlier the better. I remember when I got my first job right out of college. My boss told me the best time to invest was yesterday!
Looking back, I kind of laugh at it now because its true. The power of compound interest favors investors who invest early and for the long-term.
5. Get into real estate investing
Real estate is an incredible source of passive income. Unlike dividend payments (which typically occur on a quarterly basis), rental income comes in on a monthly basis.
Real estate rentals can be a lucrative opportunity for those who put in the time and effort.
If you’re not interested in traditional real estate rentals, I would highly suggest using a crowd source platform such as RealtyShares.
RealtyShares lets you invest with experienced private equity investors on a variety of real estate properties (for a low as $2,000).
You can invest in:
- Single family homes
- Multi family homes
- Commercial real estate
- Large apartment complexs
- …and so much more
This allows you to put your money with people who have experience and skill in the area. Plus, it allows you to access rental opportunities that weren’t available 10 or 15 years ago (except only to the very wealthy).
Reaching early retirement is all about setting goals. Even small baby steps can help you reach financial freedom!
P.S. check out my post about building passive income ‘freaking fast.’
It details the four steps you should follow to start building passive income fast:
1. Save more than you earn.
2. Invest all active income into passive income.
3. Start a side hustle ASAP.
4. Fail until you succeed.
Readers, do any of you have small financial goals on your way to achieve financial freedom or early retirement? What are they? Let me know in the comments!