TradingDojo #5: Path of FIRE - Your Financial Habits Shape Your Future

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In my previous post, I mentioned how I was embarking on my personal "path to FIRE", and that I would begin documenting various aspects of this journey. Undoubtedly, anyone that begins this path (and takes it seriously) ends up coming across loads of resources, apps, and methods for growing and preserving wealth over time.

Habits shape our present lives and ultimately end up molding our future. The key to building your dream life is to embrace more positive/productive habits while stripping away bad ones. Today, I'll share 4 habits I've picked up that have already yielded tremendous results and will continue to drive them long into the future.

Habit #1: Tracking Net Worth & Spending


About 14 months ago, I decided to start taking my finances seriously. Before then, I had never closely tracked my finances. I would roughly guesstimate my net worth, eyeball my purchases, and not establish any sort of predefined spending habits. I didn't even have an accurate count of my core monthly expenses (housing, groceries, utilities, insurance, etc).

After my first month of tracking every single penny in/out (as well as daily values of investing accounts, debts/loans, etc), I began to have a clear financial picture for myself. I use YouNeedABudget, aka YNAB, to track all of this. Most of my accounts hook up via API to import your data on a daily basis, however, for manual accounts (like crypto wallets), you'll have to manually input any transaction data.

Now, over a year later, I've cut back monthly spending on "junk" by over 40%, and have pushed up my monthly investing by over 120%. Having a clear picture of your finances is incredibly empowering, and allows you to make way better decisions. YNAB gets you to "give every dollar a task" - meaning every single dollar in your budget has a purpose, whether that's allocated towards paying down debt or being thrown into investments.

Following this strategy has been one of the best moves I've made yet! I have over a year's worth of data to reflect upon now, tracking every single penny I've earned, spent, or invested, and where's it has gone to. YNAB is free for the first 34 days; after that, it's about $90/year. Grab your first 34 days free.

Habit #2: Spend on Experiences, Not Packratting


Roughly 6 years ago, I took my first trip abroad ever. I embarked on this trip with nothing but a backpack stuffed with 1 week's clothes, toiletries, my laptop, and my wallet with a small bankroll - that's it. Little did I know that this trip would change my life forever.

I would go to spend the next 2.5 years traveling the globe, bouncing from country to country. The nomadic lifestyle quickly found itself coursing through my veins; I lived and breathed travel. I craved experiences. I molded new friendships and bonds with people from around the world. Exotic tastes and cheap street eats were my guilty pleasure.

These things replaced the mindset I had known for over 2 decades prior. Growing up in the US, we're taught that the key to happiness is buying a bigger house. A flashier car. Having the loudest lifestyle, the most expensive trinkets. But once I escaped this materialistically visioned tunnel, I found myself rejecting these things. I had absolutely 0 desire for any of them.

Instead, I found myself wanting to use my resources to enjoy the moments in front of me, and to explore everything around me that was still foreign and unknown. Traversing the world became my addiction.

Spending money on experiences brought me down to earth, and has kept me grounded for a long time now. I've let go of my old desires, and only because of this, have I been able to invest more, while still enjoying life and what it has to offer. I don't seclude myself from the joys of this world - I simply focus on enjoying the intangible, the places, people, and moments that will stick with me for the rest of my life.

Things lose value, but experiences tend to appreciate within our minds.

Try finding deep joy in using your resources to enjoy the other things that life has to offer, outside of the usual material goods. You might be surprised to find that your life becomes enriched by this mindset and that you don't have to buy the latest pair of Yeezys or the most up-to-date iPhone to find your meaning and happiness.

Habit #3: Spending Less on Housing


There's no doubt that a massive part of your expenses throughout your life will be allocated towards housing and accommodations. Paying rent, or having a mortgage, makes up on average, 25-35%+ of a typical American's monthly expenses. Add this number up for hundreds, if not a thousand or more months (over the span of someone's lifetime), and you end up with an absolutely massive number.

Then, take into account how much this number could have theoretically been worth, if you had invested every dollar monthly, and then compounded earnings. The result is enough to make anyone sad - when calculating my own number, I was quite disheartened when figuring out my end result if I lived until I was 80!

The goal here first is to decide whether you want the freedom of being a renter, or the financial upside of being a homeowner. Different age groups are attracted to different statuses when it comes to being a renter or being a homeowner. Personally, I've enjoyed the freedom of being a renter for the past 11.5 years - after high school, I immediately moved out and began renting. While some would argue that yes, owning a home would have been a better decision financially (in the long run), I would counter that the freedom that came with renting - being able to move whenever I felt like it, to wherever I wanted, with no strings attached, was incredibly appealing.

There's also the luxury of not having to worry about the other costs associated with holding a mortgage, that many people seem to forget about. Things like maintenance, property taxes, even mortgage insurance, can add up quickly and further eat into your monthly income. When you're younger (and probably not earning as much as you could be), these added costs can really hit hard, further preventing you from saving and investing.

If you choose to own a home, that's also fine, too. Homeownership can be very lucrative if you leverage your position properly. I'm currently looking into buying my first property, with a focus on buying a property that I can both live in, while also renting a portion of it out. The objective I'm focused on is reducing, if not completely eliminating, my personal monthly expenditure on rent/my mortgage, by either renting OR AirBNBing spare bedrooms out. Since I'm single, this is a very appealing option to me - and it may be for you, too.

Being a first-time homebuyer in the US, there's also the bonus of being able to get an FHA loan, reducing the downpayment required to just 3% - meaning you can leverage (almost entirely) the bank's money. If you're renting or BNBing at least 1 or more rooms out, and you bought a property in an area that makes sense financially, you should be able to reduce your personal monthly expenses by half or more, possibly even completely eliminating your monthly housing expense (while also building equity).

Not a bad way to increase the amount you're able to save and invest monthly, I'd say!

Habit #4: Creating Passive Income


Even when people retire early after following a regimen to achieve true FIRE, they typically find themselves with a lot of extra time - and being young and full of energy still, a desire to do something productive with it (even if they don't necessarily want to "work" in the traditional sense). More and more these days, we're seeing people turn to create various streams of passive income by simply using the available tools and avenues available on the internet.

The term "Digital Nomad" would probably be an accurate way to describe me. Working and earning remotely is something I've done for a number of years now - not being tethered to one single location is incredibly "freeing". We're seeing this same trend play out globally as well. The ability to travel and still earn is being taken advantage of by an increasingly large amount of young adults and those in their early 30s. Blogging, podcasting, dropshipping, remote consulting, and various other internet niches are among some of the favorites of this demographic.

Creating your own stream of passive income can be a bit overwhelming at first, especially since this stream usually takes quite a bit of time, effort, and creativity, typically before yielding any results. Some people report building their YouTube channels or web blogs for 12 - 18 months before really seeing any sort of significant return on their investment. However, the effort is usually rewarded quite well - as long as you stick with it.

Writer JP Livingston runs a personal finance blog called The Money Habit - she made over $60k in the first year of going live. Other people have found themselves earning north of $20k plus in their first year as well - all with a little elbow grease, a laptop, and a decent internet connection.

It's all about finding something you enjoy and running with it. Creativity knows no bounds, and those that find themselves with an abundance of it tend to flourish (when that energy is directed in the proper way). So, look closely in the mirror, and dive deep into yourself. Find what truly makes you tick, brainstorm, and jot down your ideas. I bet you'll find at least 3+ ideas that can become a hit, as long as you were to stick with it!

More to come...

There are plenty of other habits that I haven't touched base on just yet - they're coming up shortly! Currently, I'm writing as time permits, so I have to keep these at least somewhat short in length (although as this writing thing progresses in nature, I'd love to be able to devote more time to do this). Perhaps following my own words, habit-wise, will drive me to build this into something sustainable, that allows me to explore my mind, write, and create content full-time.

Who knows. I guess that all depends on whether any of you find value in this stuff or not xD

Anyway, I have to get back to my usual routine - web design and development. Although I really enjoy what I currently do, I am finding a lot of enjoyment (as well as relaxation, surprisingly) in writing and exploring the inner chambers of my mind. This isn't something I've done for a long time, so it's interesting to see it come to life in the form of words online.

Let me know if you do find value in this. I'd love to hear from you guys - feedback is incredibly valuable. I plan on doing this a few times a week, at least to start, so expect to see more content from me!

Happy Coinhunting,
Gh0st | @TradingDojo / @nulledgh0st

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