January 5, 2025 • 1hr 2min

TIP689: My journey into financial independence w/ Stig Brodersen

We Study Billionaires - The Investor’s Podcast Network

In this episode, Stig Brodersen shares his personal journey toward financial independence, starting from his decision at age 29 to pursue this goal while teaching at a local college. He discusses how he and his wife created a plan to achieve financial independence by age 45 through careful budgeting and investing. The episode covers both successes and failures along the way, offering insights for others on their own path to financial freedom.

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Key Takeaways

Financial independence is a journey, not just about hitting a specific number
Most people overestimate what they can achieve in 1 year but underestimate what they can achieve in 10 years
The 4% rule suggests you need 25x your annual expenses invested to achieve financial independence
Having equity ownership (through business ownership or investments) is often necessary to achieve financial independence in your 30s-40s
Lifestyle creep is one of the biggest challenges - important to increase savings rate as income grows
The journey can be lonely as most people aren't truly committed to pursuing financial independence
Money can "sort of" buy happiness by giving you more options and control over your time
Having both negotiables and non-negotiables is important once you achieve financial independence

Introduction

In this episode, Stig Brodersen shares his personal journey toward financial independence, starting from his decision at age 29 to pursue this goal while teaching at a local college. He discusses how he and his wife created a plan to achieve financial independence by age 45 through careful budgeting and investing. The episode covers both successes and failures along the way, offering insights for others on their own path to financial freedom.

Topics Discussed

Overestimating Short-Term vs Long-Term Achievement (1:45)

Stig discusses how he initially thought The Investors Podcast Network could generate significant revenue quickly but learned that building a successful business takes much longer than expected.

Initial expectations were to make $100,000/month after first year
Reality was closer to $100/month in early years
Success came from thousands of small improvements over time, not one big breakthrough
Important to love the journey since the path to success takes longer than expected

The Tipping Point (5:14)

Stig identifies his tipping point toward financial independence during a trip to Morocco in 2019.

Realized he had built a true business vs just self-employment
Could spend 10-15 hours/week maintaining current income
Additional time could be spent growing the business
Focus shifted from hitting a specific number to building sustainable cash flows

Why Most People Don't Want Financial Independence (8:28)

Stig makes the provocative argument that most people don't truly want financial independence, despite saying they do.

People want the outcome without the sacrifice
Few take action even when given step-by-step guidance
Financial independence requires a complete lifestyle commitment
Most prefer immediate gratification over long-term financial freedom

Money and Happiness (11:58)

Discussion of how money can "sort of" buy happiness by providing more options and control.

Money doesn't guarantee happiness but can reduce certain problems
Provides better access to healthcare and treatment options
Allows more time with family and friends
Enables pursuit of meaningful work and interests

The 4% Rule and Required Numbers (15:55)

Explanation of how much money is needed to achieve financial independence.

4% withdrawal rate considered sustainable based on historical data
Need 25x annual expenses invested
Example: $100,000 annual expenses requires $2.5M invested
Conservative estimates should account for inflation and market volatility

Equity Ownership and Financial Independence (18:22)

Discussion of why equity ownership is often necessary for achieving financial independence earlier in life.

Hard to achieve through salary alone
Business ownership provides higher earning potential
Important to consider both liquid and illiquid assets
Corporate ladder climbing often leads to lifestyle creep

Valuing Private Businesses (21:56)

Insights into how private businesses are valued and considerations for business owners.

Typical multiples of 5-8x earnings for small businesses
Factors affecting valuation include:
- Revenue stability and growth potential
- Key person risk
- Recurring revenue percentage
- Market conditions and interest rates

Finding Your "Why" (26:42)

Discussion of what to do after achieving financial independence.

Focus shifts from "how much" to "why"
Importance of having meaningful work and relationships
Value of empowering others
Creating positive impact through business ownership

Negotiables vs Non-Negotiables (30:47)

The importance of establishing what you will and won't compromise on.

Financial independence allows more non-negotiables
Need balance between flexibility and boundaries
Different priorities at different life stages
Avoid becoming too rigid with too many non-negotiables

Avoiding Lifestyle Creep (33:01)

Strategies for managing increasing wealth without proportionally increasing spending.

Save 50% of income for investments
Increase savings as income grows
Be conscious of relative spending comparisons
Focus on building wealth engine first

The Lonely Journey (37:34)

Discussion of how pursuing financial independence can be isolating.

Few people truly commit to the journey
Hard to find like-minded individuals
Most prefer talking about vs taking action
Importance of finding supportive community

The Journey is the Best Part (41:49)

Reflection on finding fulfillment in the process rather than just the destination.

Focus on being best version of yourself
View work as part of life, not separate
Find enjoyment in learning and growth
Success comes from consistent daily habits

Conclusion

The episode emphasizes that financial independence is a highly personal journey that requires commitment, patience, and a willingness to make sacrifices. Success comes from thousands of small decisions over time rather than any single breakthrough moment. While the path can be lonely and challenging, finding fulfillment in the journey itself is crucial. The key is designing a system that allows you to be the best version of yourself while building sustainable wealth through business ownership, investing, and careful lifestyle management.