Posted: 15 Apr 2008 04:50 AM CDT
Flickr photo by Birdfreak.com.
Mountains are majestic features of nature. Tall, imposing and commanding. They represent the very heights to which the earth can stand out whilst still being of this earth.
Our journey towards financial freedom involves mountains. No, not the beautiful mountain of Grand Teton National Park Mountain Range in Wyoming but rather the personal mountains that each one of you have to climb in order to achieve your goal of being financially free.
To climb your mountain
The height of your own personal financial freedom mountain is determined by how high you set the target. A frugal and simple life does not require you to have a million dollar net worth. You may be able to get by with a nest egg of $250,000, $500,000 or perhaps $750,000. Whatever is the target, you determine how high you want to climb given the time you have on this earth.
For you to climb your mountain, you must first establish how high it is, i.e. what is your projected investment capital required to be able to live off the passive income. You also need to consider how are you going to tackle the mountain. Just as Mount Everest climbers spend months and even years of preparation before they attempt to scale its majestic peaks, you should be well prepared to climb towards your target of financial freedom by reading about personal finance, savings and investments, different asset classes such as treasury bills, equities and related information.
To reach your peak
You climb a mountain by taking one step at a time, ascending towards your target through milestones and checkpoints you have reached over time. One of the ways you can track your progress is to look at the height you have reached over time. Applying similar techniques to your climb towards your mountain of financial freedom means tracking how well you have managed to pay down your unsecured credi t (if any), housing and car loans and accumulated investible savings in cash and CPF.
I track my own personal net worth and more importantly, compute how far off I am from my target over time. I also do what-if analysis to see how long it would take at my current rate to ascend to the peak of my own financial freedom peak.
Knowing how high you have climbed gives you the sense of satisfaction as well as motivation to continue with the journey. The view at the top will be worth it when you look down on what you have overcome to reach that point. I remember when I was in the Singapore Armed Forces (SAF) as a conscript, I climbed up a small knoll in the SAF training areas and whilst it was tough reaching the peak with a signal set strapped to my back, the satisfaction from reaching the top and the excellent view of fellow soldiers trooping up made it worth it.
Are you prepared to scale the Everest of your life?
You want to be financially free. You want to climb the Everest of your financial life. You can do it, if you are prepared for it by living within your means, saving and investing, growing your means and protecting your means.
Be well and prosper.