, 18 tweets, 5 min read Read on Twitter
1/ I love personal finance & I think the overall thinking process needs to be disrupted — by you.

You got to start thinking differently about money & that is why I post about it on my feed.

So I recently came across these classic, traditional, personal finance rules...
2/ ...and I thought why not add my 2 cents to each and one of these. Disrupted them for you & give you a glimpse of how I actually run my own personal finances & think about money.

The classic, traditional rules go something like this...
3/ Live below your means. Get out & stay out of debt. Have an emergency fund. Avoid credit cards. Save between 10-20 percent of your income. Use tax-advantaged & retirement accounts & buy index funds monthly. Keep your fees as low as possible, never pay over 1%.
4/ To be honest with you, if I followed the advice above, I would still be stuck in a cubical office working for a small 5 figure salary (how I started).

While I agree with living below your means, many people fall into a scarcity mindset over the growth mindset. Yes, it is...
5/ ...important to live within your means & save money, but you CANNOT save your way to prosperity. You need to grow!

Please understand that I don't buy this whole retirement at 65 nonsense. I don't only want financial freedom when I'm old, but also when I'm young.
6/ Get out & stay out of debt? How can you grow without leveraging other people's help, including their capital?

Of course, the debt used for consumption is not healthy. That is clear as day. However, not all debt is equal.

7/ Should you have an emergency fund? For most people who have only their salary to depend on, yes.

Most millionaires have at least 3 sources of income while research says it's well over 7. If you have that many, you don't need a (big) emergency fund at all.
8/ Once again, we come back to the scarcity vs abundance mindset. If you read the classic by Robert Kiyosaki about the way his Rich Dad vs his Poor Dad was thinking, you'll understand that the best emergency fund is creating another source of dependable income.

I don't have one.
9/ Should you avoid credit cards? In my view, not at all. You got to have discpline paying them off on time but these cards offer bonus miles on sign up & plenty of miles every time you spend your money. You could have business class flights for free few times a year!
10/ To save only 10% or even 20% of your salary will not help you reach financial independence during your youth (before 40).

You will need to be a whole lot more aggressive. E.g. despite all the travel I do, I try to save at least $2 for every $1 I make. Hopefully, even more!
11/ Without getting too bogged down into taxes, let me do a simple illustration of why the abduance mindset is so important & linking it to very high savings percentage rates will change the way you view money and your freedom.
12/ Let us assume I have a job earning me $80k annually, plus also a side hustle where I'm making another $40k. My total annual income was $120k or $10k / month.

If I lived on $4k & saved $6k / month I'm basically earning 1.5 years of freedom for every year of work I did. So...
13/ ...if I worked for 10 years straight, I'd have 15 years of freedom saved without even investing a cent.

Increasing my income to $160k annually & still keeping my monthly costs the same now means for every year of work I'm gaining 2 years & 4 months of freedom. After...
14/ ...10 years of work I would have 23 years of freedom, assuming the same cost of living.

Of course, inflation has to be taken into account. Life changes, marriage, kids, etc.

On the other hand, at your disposal, you have compound interesting to help grow your savings.
15/ Learning how to compound money at much higher rates of return compared to what index funds give (around 9 percent over the long run) is an essential part of achieving your financial independence as early as possible.

My target rate of return is 15%. Minimum!
16/ Most people will tell you that is not possible. Of course. Why even bother trying, right?

I never bother putting any meaningful money in tax-advantaged & retirement accounts. The only thing I am doing is making those Wall Street guys rich, who live of monthly fees.
17/ Also of note, to earn the higher rates of return — either by doing it yourself or having some do it for you — will cost you & you should pay!

This whole fee thing has gone too far. I'm more than happy to pay 5% in fees if a sponsor/syndicator returns me 15% net!
18/ In summary the key element is having that abundance mindset & thinking outside the box. Don't follow the traditional personal finance rules & conventional wisdom.

Mediocre strategies & plans produce mediocre results. 👇

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