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Why Cash Flow Is Important

Why Cash Flow Is Important

I have made my early retirement plan known throughout the web. My hope is that I can generate enough income from my blog that I can replace my day job and transition to managing my portfolio of blogs and investing in real estate. My hope is to sustain, if not increase, this income in order to fund my early retirement.

How My Early Retirement Plan is Different

Most people, when they talk of early retirement, cut their expenses drastically. They work really hard to save every penny that they can in order to save enough money. I am definitely a huge fan of this method as I think everyone should avoid the massive consumerism in our society. Saving money for a rainy day is always a great plan. Yet, because I am still young, I do not want to make huge sacrifices. I am not entirely unhappy at my day job, so why would I want to sacrifice my comfortable lifestyle just for the sake of working for myself?

Instead of trying to save a large pot of money and reduce my expenses drastically, I am focusing on funding my retirement with cash flow. I don't think a lump sum is the right method for my early retirement – primarily because it means that it would take decades longer to retire. Instead of waiting 15-20 years to save up 1 million dollars, I would much rather create a business that will generate the equivalent of the safe withdrawal rate.

What My 'Cash Flow Retirement Plan' Offers Me

My focus on cash flow as the fund for my retirement primarily offers me two benefits as opposed to the lump sum approach. I have already hinted at both benefits. Although traditional pension schemes work well for most, a cash flow approach allows me to retire early. I don't have to wait around to have enough income saved up that I can live off of the interest. Second, I don't have to radically reduce my expenses to prepare for retirement. By focusing on building up a steady stream of income that does not require me to work a traditional job, I can feel confident that I will have that income tomorrow and the next day. I don't have to count my pennies in preparation for this transition because the income will still be rolling in as if I had a day job.

By focusing on the cash flow, I can truly accomplish my goal of early retirement – that is, to enjoy life to its fullest. I don't have to miss out on the trips to Hawaii, or the occasional sports game, or anything like that. I can continue my modest lifestyle as it is without fear of running out of money.