The Simple Dollar posted a great article that is helping a member who is young figure out if he starts early, then when can he retire. If he start at the age of 20 years old, then he can retire early basically at about 42 years old. That will only mean that he will be getting the same salary that he has right now but he will be work free but still far from retiring rich.

If you were to take 20% of your annual income starting at age 20 and put it in a S&P 500 index fund, that index fund continues to grow at the long-term historical rate (12%), and you received a 4% raise each year, you could walk away from your job and live off the interest at age 41 matching your current salary, or quit at 43 and be able to give yourself a 4% “raise” each year from the interest, which is probably the better plan because it combats inflation. Raise the amount to 25% and you’re done at age 38 and able to live in perpetuity at age 40.

All he has to do is save 20% of each pay check and then invest into an index fund like the S&P 500 index fund, I prefer to use Exchange Traded Funds (ETFs) but all the same.

The hardest part is saving that 20% or heaven help you if you can 25% per paycheck.

But like snow-flaking debt, why can’t you snowflake to a rich retirement? And of course, once you start to save and that compounded interest really kicks in, then you can be saving an extra couple thousand per year just on interest alone.

If you can save $20,000 and get 5% in interest, then you just gained an extra $1,000 for having your money sit there. That $1,000 will then help you reach another $20,000 that much quicker then before you know it, you are now getting an extra $2,000 per year.

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In this interview with Vanguard Eric Tyson, one of my favorite investment companies, Tyson states that most time people are there own worst enemies because they overspend and run themselves into debt.

The number one problem is overspending. Some Americans, frankly, are not savvy consumers. They lack the discipline to live within-or below-their means. They live in the moment, pursuing instant gratification instead of doing what’s in their long-term interest. They abuse credit cards, buy stocks without doing research, and generally have little or no idea how much they should be saving toward future goals.This isn’t especially surprising. We’re all bombarded by advertising 24-7, and it’s difficult to insulate yourself from the pressure to drive the “right” car, live in the “right” neighborhood, own the “right” stock, and so forth. Americans need to learn that giving in to that kind of pressure can have serious consequences to their financial well-being.

It is as simple as that. Easier said then done as well because it takes amazing will power to hold back on spending and to treat yourself or those that you love. So in the retrospect, try to maximize as much as you can the amount of money that you do not spend and constantly try to beat that amount. Then simply invest until your early retirement comes around.

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Snowflaking is a more basic and simple approach to the snowball effect to debt reduction. When you think of snowballing, you think dollars a day while when you think of snowflaking, you think of pennies a day.

With this approach, even a dollar a day extra can accumulate to a large reduction in time. I would use this to pay off the higher interest debt first. Adding the snow flake effect as extra monthly principal.

You can take income from minor second income ventures as well.

Ebay.com – One approach is to sell items on ebay.

Craigslist.org – craigslist then take the extra income to apply it to snow flakes.

Survey Online – Another approach would be to take surveys online.

Yard Sale – Even old methods such as yard sales can deem valuable and effective to the cause.

You can use any of these methods to gain extra income and you should send payments immediately or as soon as your permitted to.

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Credit cards are great but require self restraint. It just makes it too easy at times to spend money and you don’t notice the total until the end of the year. So this is the greatest debt builder but we have a great way to combat this.

1. List you credit cards in interest order.
2. Determine which credit cards you will terminate because as a rule of thumb, you don’t need more then 3 credit cards ever.
3. Call each credit card company in order and ask for a lower interest rate and “no fee 0% APR” transfer.
4. Start transferring balances from the new adjusted higher rates to the new lower rate.
5. Pay off the remaining balances on the highest credit card balances first.
6. Snowball your new debt free life.
7. As you pay off the debt, cancel the card on balance completion until you have 3 credit cards or less left.
8. Pat yourself on the back because you just terminated you debt.

It’s that simple to do. It may take some time but this method is the best and cheapest method to remove these hurdles from your path to getting rich.

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To become financially independent you will first need a road map that will help you attain that level of independence. I have been playing around with some methods and I found that these were some good methods to help me out. A good road map should help you get out of debt, invest, budget and plan for retirement.

Making Money Methods

• Set Goals – What do you want to do? Make money, attack debt or plan for retirement. Hopefully you will like to do all of these things at once. I planned to set my goal to increase wealth and in that respect to increase wealth.
• Read Personal Finance – Read every web article, book and subscribe to personal finance magazines.
• Track Spending – Track all of your expenses so you can see where your money is going. I realized that I spent about $60 per week at Duane Reade. You know that was cut later on.
• Cut Expenses – This goes hand in hand with tracking expenses. You then analyze where you spend too much and then trim them out of your budget.
• Decrease Debt – Start cutting down credit card debt. Start with the smallest debt then work your way up to the big ones. Shop around better interest rates then call up your current credit card and tell them to rate you can get and see if they will negotiate. If they do fine but if not then transfer the debt to the new one and close the old credit card immediately. Cut your total credit cards down to 2 maximum cards.
• Extra Income – Look into alternate streams of income. I use dividend stocks, Google Adsense, web advertisement, regular 9 to 5 job, high yield money market account for liquid money, rent house/apartment.
• Purchase Stock – I would say to purchase dividend stock because they increase per share and they still function as stock.
• Purchase Property -By purchasing a property, you increase your wealth automatically and fast. You force yourself to save and properties increase with inflation.

This simple but highly effective methods are so simple when you think about it, but highly effective. These cover making money, removing credit card debt, gaining extra income, cutting expenses with a tighter budget and planning for retirement by learning steps to increase wealth.

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