How to reach FI in HCOL areas?
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Reaching financial independence (FI) in high-cost-of-living (HCOL) areas can indeed be more challenging, but there are strategic ways to make it achievable. Here are some insights and techniques discussed by Brad Barrett and other financial independence practitioners:
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Real Estate Creativity: Amon Browning achieved FI in the Bay Area by purchasing properties during off-peak times like holidays and performing DIY renovations to reduce costs. This helped him acquire and improve assets without the usual high expenses associated with such an expensive area 1.
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Income Optimization: According to Jamila Souffrant, reaching higher financial independence levels in HCOL areas is often about maximizing income through career advancement or side hustles, while managing expenses smartly. This includes using income differentials to invest and save aggressively 2.
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Frugality and Local Solutions: Doug Nordman suggests maintaining a high savings rate and adopting local habits to cut costs, such as eating locally sourced foods and minimizing wasteful spending. This approach, combined with strategic choices like sweat equity in housing, can profoundly impact financial outcomes 3.
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Moving to Lower Cost Areas: Brad Barrett himself chose to move from a HCOL area to a lower-cost location to enhance his ability to save and invest. This move alone can accelerate the path to FI by dramatically reducing major recurring expenses like housing 4.
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Remote Work Opportunities: Leveraging remote work can allow you to tap into incomes characteristic of HCOL areas while living in locations where the cost of living is significantly lower, balancing income potential with reduced expenses 5.
For aspiring FI individuals in HCOL areas, combining these strategies with a disciplined approach to budgeting and investments might be essential. It often comes down to creative housing solutions, optimizing income streams, and applying relentless frugality wherever possible.
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