Brian Johnson breaks down J.L. Collins' three rules for financial independence: avoid debt, save at least 50% of your income, and invest the rest in index funds like Vanguard's Total Stock Market Index Fund. Simple to understand, hard to actually do.
Questions this video answers
Brian Johnson.
'+1 #875: FIRE: The Big 3'.
August 28, 2019.
1) Avoid debt; 2) Spend way less than you make (save at least 50% of earnings, per the transcript); 3) Invest the rest (in index funds).
Vanguard's Total Stock Market Index Fund.
Chapters
Hi, this is Brian. Welcome back to another Optimize plus one, continuing our series on how to build a bonfire. Today we're going to chat about the big three of creating financial independence and interdependence as we win the ultimate game of life Realizing Eudaimonia. Let's flip open our copies of the Simple Path to Wealth by J.L. collins for this wisdom love. As we briefly discussed in our last plus one, JL is a tough love, lovable uncle kind of guy. He originally shared his simple path to wealth via a series of letters he wrote for his daughter. Those letters became a blog series and that blog became very popular. By the way, when searching for his site, I found a Google talk he gave that you might enjoy as well. Check it out for the link. Obviously check out the book and JL site for the deep dive. And I'm a lover of wisdom, not a financial planner, so keep that in mind. But here's the big three in a tiny little nutshell. Number one, avoid debt. Number two, spend way less than you make. And number three, invest the rest. That's it. Do that, give it time and voila. Well, obviously there's a lot more to it than that. But as they say, the numbers are simple. It's the lifestyle changes that are hard. One more time. Number one, avoid debt like the plague. Seriously, debt is toxic to your freedom. Think shackles. Number two, spend way less than you make. JL and the fire company tell us to save at least 50, 50% of total earnings. Yeah, 50%. At least 50% less than you make is what you want to spend. You want to buy freedom. It's not cheap, but it's a lot more shiny than that shiny stuff. Although no longer cool, it's as wise as ever. Live below your means. Way below. But only if you want what really matters. The eudaimonic happiness that freedom helps helps us buy. And then we have number three, invest the savings. More specifically in index funds. More specifically in Vanguard's Total Stock Market Index Fund. This is kind of what JL is known for. He tells us we should all consider Jack Bogle a hero. Bogle founded the Vanguard Group and invented index funds 40 years ago. JL provides some very compelling arguments for why Vanguards Total Stock Market Index Fund is this secret sauce. Warren Buffett pretty much agrees, by the way. So that's today's +1. How to make fire 1 +2 +3.
