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Today’s post comes from personal finance writer and fellow S&S reader, Patricia Sanders. You may have seen her work on sites like FinTechFreedom and Early to Rise. Check out Pat’s bio following this article.

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7 Keys to Achieving Financial Independence and Retiring Early

Financial Independence, Retiring Early (FIRE) is currently one of the most popular topics in financial journals, magazines, and websites. People are sick of the 9-5 and would rather live the FIRE lifestyle so they can be free to pursue their passions.

But FIRE is no piece of cake! It requires thorough planning and hard work to achieve this lofty goal. Lucky for you, we have some tips to help you achieve FIRE as smoothly as possible. Here are our 7 keys for FIRE success.

1. Set some solid strategies

According to the experts, once you earn 25 times your annual expenses, you’re officially financially independent. 25 times is a lot, so you’re going to need some solid strategies to make this happen.

Strategies like:

• Working harder than most people.
• Cutting more expenses than most people.
• Saving more than most people.

So, before starting your journey, set your strategies.

2. Say goodbye to your debts as soon as possible

With a pile of debts, you can’t achieve financial independence. Especially if you have high-interest rate debts. High-interest debts like credit cards and auto loans cost a fortune in interest and delay any chance you have of winning FIRE.

So, you have to get rid of those pesky debts first. There are a few options for getting out of debt.

1. Choose a good debt repayment method to pay off your debts. You can follow the debt snowball (aka debt avalanche method), where you make extra monthly payments on one debt at a time, starting with your highest-interest debt.
2. You can take out a consolidation loan to consolidate your debts into one simple monthly payment.
3. If you think the debt amount is too big for you to every repay the amount in full, try settling your debts by yourself. Simply approach your creditors, explain your financial hardship, and request a settlement.

You can also seek professional debt relief help to get rid of your debts sooner.

3. Consider extreme money saving to achieve FIRE

Saving only 15% of your income is not enough when you want to achieve FIRE.

Experts say you need to save at least 40% to 60% of your income. The more you save, the sooner you achieve FIRE.

Start by creating a strict budget. Then incorporate frugal living hacks to save as much as possible.

For example:

• Eating homemade instead of visiting restaurants.
• Saving money on transportation. You may have to survive with an older car. Or, better yet, no car at all.
• Saying “No” to luxuries like expensive vacations.
• Living in a small place to save on maintenance.
• Cutting down all the unnecessary expenses to save even $1 extra.

4. Make good investments

To some extent, you can build savings simply by setting aside money from your income. But to achieve financial independence, saving money is not enough. You have to try to grow your money fast. So, you need to invest your money.

Index funds and real estate are generally the best investments for stability and growth. And you want to “diversify” by splitting your money between multiple investments. No one wants all their eggs in one basket!

Remember: markets (like the stock market and the real estate market) are cyclical. Some years they’ll be up, and some years they’ll be down. Don’t let that discourage you. Over time, investments in real estate and index funds provide high average returns.

And if you’re ever unsure about your investment strategy, contact a certified financial advisor to answer all your questions and give you specific guidance for your unique circumstances.

5. Build an emergency fund to safeguard your savings

An emergency has the power to destroy all your hard-earned monetary achievements. So, you need to be prepared to safeguard your savings. Building an emergency fund to help you survive things like illness, job loss, and accidents is Personal Finance 101.

Before you make any other financial moves,  make sure you have enough savings to cover at least 6-9 months of living expenses.

6. Consider profitable side hustles

Multiple income streams can boost your cash flow so you have more money to save. Thus, you can save more in a short span.

There are limitless ways to earn some extra bucks. Here are just a couple ideas

• Work as a freelance writer.
• Teach cooking classes.
• Babysitting and pet sitting.
• Ask for a raise at your workplace.
• Rent out your garage and/or spare room.
• Sell anything and everything you’re not using.

7. Talk to your family/partner about your FIRE dream

If you share finances with your significant other or have a family to look after, you have to talk to them regarding your FIRE dream. After all, achieving FIRE requires serious lifestyle changes, and you need to make sure your family is up to the challenge.

So listen to their opinions on your FIRE ambitions. Lastly, be realistic.  FIRE is not easy. So ask yourself some questions before proceeding toward this goal.

• Is your monthly income enough for achieving FIRE?
• Can you set aside enough money for FIRE after paying all the monthly obligations?
• Do you really want to win FIRE?
• What will you do after saying goodbye to your 9-5 job?

If you have positive answers to each of these questions, go ahead and jump in! Nothing is impossible in this world, friend. Good luck!

Collaborative Author Bio: Patricia Sanders is a financial content writer. She has been praised for her effective financial tips that can be followed easily. Her passion for helping people who are stuck in financial problems has earned her recognition and honor in the industry. Besides writing, she loves to travel and read various books. To get in touch with her (or if you have any question regarding this article) email her at sanderspatricia29@gmail.com.