Lean FI

How we attained “Lean FI,” and how you can too!

We finally attained Lean FI. It’s crazy how we got here. I love that we’ve finally been able to accomplish this goal we’ve been working on. We are putting some plans in place for the future to start reaping the benefits of working hard for so long.

Who are we?

If you’ve followed my blog for a while, you may not necessarily know who I am and how I get my income. You may have gotten bits and pieces, but I figured I could use this opportunity to explain our current situation. I am a happily married man with 2.5 kids as of this writing. (2 kids under the age of 5 and one on the way.) We are the prototypical American, and we are a dual-income household. We are in our mid-30’s, and if we wanted to, we could quit our jobs today and be able to pay our expenses for the rest of our lives. We would have to make sacrifices to maintain our current quality of life. But it feel nice to know we could survive is something happened to our jobs. We really want to be Fat FI. Maintain our current lifestyle and quality of life just on our investments.

Currently I have a job I love. Even if we were Fat FI, I would still work here for the immediate future. Obtaining financial independence allowed me to switch to ministry, and I didn’t have to get to Lean FI to make quality-of-life adjustments. I write about how real estate allowed me to do this below.

How Real Estate Became My Side Hustle

If people make investing sound sexy they want something from you or there is more risk involved.

The 7 Phases of FI

Here is my list of seven phases of FI

Know Your Financial Score FI — Telling and tracking where your money goes
Buffer FI — Having an emergency fund of at least three months
Barista FI — You could live off of a part-time job like at a coffee shop, or if you are dual income, you could live off one person’s income.
Retirement FI — You can, with your investments, live off social security when you retire.
Peace Out FI — Your side hustle plus your investments can pay for your expenses
Lean FI — Your investments can pay your expenses
Fat FI — Your investments can pay for your quality of life well above your expenses.

How did we accomplish Lean FI?

That’s a great question. There are many out there with a practical step-by-step approach. You have the seven baby steps from Ramsey Solutions, seven money gears from How to Money, 4 step process from Rebel Finance, and even buying passive assets to pay for your expenses eventually most popularized by “Rich Dad, Poor Dad” by Roberty Kiyosaki. We did all of these at some point during our financial journeys. Many of these different methods have very similar steps, with a few extra. But I will boil down what these different approaches focus on to obtain financial independence. Financial Independence can sum it up into three main points.

Create a gap between your income and expenses
Buy assets that will bring you income
Track and measure

Which method should we choose?

Honestly, the one you will stick with. Almost every financial step talks about budgeting. As I have written before, Ramsey Solutions and YNAB are probably the best to help ensure you are creating a gap between your income and expenses.

If you have trouble with Credit Card debt and know you can’t trust yourself with them, I would encourage you to take Financial Peace by Ramseysolutions and pair it with their budgeting app or YNAB. And I would listen to their radio show or podcast.

If you think you can trust yourself

credit cards and want simplicity. I would read “I Will Teach You to be Rich” by Ramit Sethi and “Simple Path to Wealth” by JL Collins. I also take or consume videos and content from Rebel Finance School. I listen to ChooseFIor How to Money. (I prefer How to Money)

Suppose you want to get into real estate and generate a passive income that way. I would encourage you to consume the content from biggerpockets or get plugged into your local REIA.

If you want to build a side hustle or business, I will encourage you to check out Rebel Entrepreneur. They put on free to your events to help you start a debt-free business without a business plan.

I’ve done all of these methods. The truth is we have been experimenting for a long time, but the knowledge gap took a while for me to understand. Especially the investing part. When I was younger, I calculated what I needed for retirement and didn’t see how I would make it traditionally investing in mutual funds, which set me down a path of real estate investing. Over the years, the knowledge gap has closed, and I’ve learned #alotofways to achieve FI. I’ve learned that each person has to pick one they can stick with and it isn’t one size fits all.

We started tackling investing in 2014 (late 20’s) when I bought my first rental house. Before, we were putting a little bit of money away towards “retirement” in heavily fee-laden funds, but we didn’t understand it. And it wasn’t growing. It is now 2022, and we’ve officially achieved Lean FI. I’ve met with people along the same journey and have hit it sooner than I thought we would.

Remember the three keys.

Create a gap between your income and expenses
Buy assets that will bring you income
Track and measure

What I’ve found in this journey is that there two sure-fire ways to make “passive” income that isn’t gimmicky and that are time tested. There are other ways for sure but these two have stood that test of time. Investing in the stock market (preferably through low cost index funds) or investing in tangible real estate. Both can be sped up but are usually get rich SLOW schemes and aren’t that sexy. If people make investing sound sexy they want something from you or there is more risk involved. I did both and will continue to do both.

Conclusion

While I’m not saying everyone should invest in Real Estate, buying that first house and seeing how it generated income gave me a sense of freedom that I can control what the future holds as long as I am willing to take diligent and consistent steps. We’ve made it to Lean FI and are still going. I know if you haven’t made it yet, it can seem daunting. But starting now can have huge benefits Even just Barista FI could be all you need to help change your quality of life now. I would just encourage you to start.

Disclaimers

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Updated on 11/1/23