The actor from Lock, Stock (and Press Gang, for a certain generation) has given The Telegraph a cautionary tale on the reckless spending and debt-mania that saw him go bankrupt at 31:
Most of us get into investing because we want freedom, whether it be freedom from the office, from traffic jams or from the drudgery of a mortgage. We want to be free from having to work for a living.
Why then are money-motivated books called things like The Millionaire Next Door
What many of us are really looking for is a replacement for our salary. The number on your pay check is therefore the number you need to beat.
If your salary arrived in your bank account no matter what you did, wouldn’t you be free? You could quit work the next day, if you wanted – or you could get a more enjoyable or meaningful job, work for charity, or do a dozen other more fulfilling things instead.
This post explains why and how I focus my investing on growing my annual passive income stream to replace my income, rather than concentrating on my net worth.
Note: If you’re an American or European investor, please do keep reading. The principles of good money management are international! 🙂 Just mentally swap the £s for your currency and scale up or down as appropriate.
Why target income instead of capital?
New government statistics reveal home ownership in the UK is the lowest it’s been for a decade. In London there are an incredible 110,000 fewer home owners than in 2001 (not that surprising if you’ve seen London prices recently). Blame buy-to-let.
J.D. over on Get Rich Slowly has eliminated his debts and is ready to tackle his mortgage. He reckons you too can pay off your mortgage in half the time. I’m not sure that the technique he suggests works with UK banks, however.