Take a look around at those who retire early. What did they do so differently that allowed them to hang up their hat and take the rest of their life off?

• Was it a high income?
• A lucky day at the dog tracks?
• Maybe it was that they simply had a plan…

Typically people put in 40+ years of hard work before they are in the position to retire. Even then, many people are going back to work to bring back that income stream. Then there are those who are able to “figure it out” early and make it a mission to live a life of freedom.

How is this done?

1. Avoid and Eliminate Debt
2. Create a Savings Plan That Takes Advantage of Compounding
3. Turbo Charge Income

As long as you carry debt that exceeds income, it is impossible to get ahead. The money you owe will always be more than the money you make. This is a basic concept, but one that plagues many individuals and families. In addition to taking advantage of tax efficient investments, such as your employer’s 401k plan, the primary financial goal should be to become debt free.

Some debt is okay to carry, such as a mortgage and student loans, but even these need to be in line with your income.

Once debt is eliminated, your money needs to be reinvested in order to grow. This doesn’t necessarily mean investing in stocks – though it may be hard to believe that historically this is a good bet.

Look at the creative ways you can invest your money. Here are a few:

• Become a Private Lender and Charge Interest
• Purchase Valuable Art and Collectibles from Auctions
• Invest in Yourself with an Advanced Degree or Specialized Training
• Purchase Private Label Rights to Products and Sell Them

In other words, purchase assets with your money. Whether your asset is yourself, a tangible item, or something that you can be used as leverage to make money. My 12 year old neighbor wants a Nintendo Wii, so he saved up to buy his own shovel and snow scrapper and is offering a snow removal service to raise the money he needs. Ingenious!

The third piece is critical. If you want to retire early, it is entirely possible to live a frugal lifestyle, avoid debt, invest wisely, and make it happen. However, you will always live a frugal lifestyle, which there is nothing wrong with.

There are a few stories on MSN Money of people that did exactly that. One family “Saved $35 a month by hanging the laundry instead of using the dryer,” When you find dozens of ways to cut corners like this, you can increase your cash flow by dramatically reducing your cost of living.

The alternative, which is better in my personal opinion, is to retire young and rich without having to worry about money at all. My definition of financial freedom is not to have enough money that allows you to cover your bills. Financial freedom is an income streams that allow you to not have to worry about money whatsoever.

This is accomplished by producing additional income streams to boost those investment contributions.

You can only budget down your life so much, but there is an unlimited amount of money you can create – and an unlimited number of ways to create it. Once you have more money coming in, that’s extra money that can be used to purchase more assets.

Think about this… If you invest $500 every month in your 401k and over the long term you receive a 10% annual return, you’ll become a millionaire in about 29 years. Let’s say you find a way to bring in an extra $500 a month and apply that to your investments. Now you’re investing $1,000 every month and it will only take you 22 years to become a millionaire.

Just an extra $500 a month and you’ll become a millionaire 7 years sooner. But don’t think so small. What if  you could increase your income an extra $2,000 a month? How fast would your reach your first million then?

Here’s the secret. Once you learn figure out how to make $1, you can scale it up to make $100. When you figure that out, you’ll realize how easy it could be to make $500. From there, $2,000 becomes $20,000 a month, and so on. Opportunities come to you.

In conclusion, there are lots of ways to retire young, but if you stick to the fundamentals and put a plan into action, you’ll get there faster than you think.

News of the economic recession is unavoidable. Job losses, home foreclosures, increasing debt for individuals as well as businesses. But there are a lot of positive things I’ve seen developing from the downturn in the economy.

Maybe it’s the holiday season, but people seem to be more empathetic. Everyone in some way is touched by the economic recession, which makes us all more human and connected in some way. When we are able to directly relate to what other people are going through, we feel safe exposing our vulnerable side.  It allows each person to relate to their neighbor, their community and their family.  Topics, such as money, that were once taboo are now discussed out in the open.

And while the economy may have gone back 10 years in time financially, it’s as if our lives and habits have gone back 30 years. We are revisiting our parents’ and grandparents’ generations in regards to past-times and entertainment.  Think what it was like before the age of video games.
When siblings shared bedrooms in a “starter home” that fit the family budget.  And when Americans valued their time with their family, and overall were more conservative with their money–appreciating what they could afford and respecting what they could not.

We have operated for a long time with the idea that investing in the stock market and in real estate carried very little risk. We thought of how much money we could make and not how much money we could lose. We now know that it was fools’ gold, and a great lesson on how investments and risk actually works. It may be a tough lesson to learn, but it is a very valuable and necessary one.

As a result of the recessed economy and portfolios, people are learning what it really means to diversify and why it is important to keep your assets properly balanced. When the stock market is losing money, it forces you to explore and familiarize yourself with other places to put your money based upon your risk tolerance. In other words, we’re becoming more financially educated.

One of the best outcomes from these troubled times is that families are coming closer together. Families are actually eating dinner together as they are no longer eating out to save money.  As a result, parents are getting to know their children better and finding time to talk to them about the things going on in their daily lives.

I find it interesting that movie theaters get busier the worse the economy gets. Now that people are budgeting their money, families fall back on the entertainment they remember from their youth, which leads to more quality time spent together. People are not just throwing away money like they used to. For the first time in a long time, Americans are taking a good hard look at their income, their expenses, and preparing for “what if” scenarios.

All of this, are things we should have been doing all along, but now we are doing it out of necessity. That’s a good thing. We are modeling good behavior for our children and teaching them the value of a dollar — something that our youth for the most part had no previous concept of.

For those who have money to spend, there are some great opportunities all around. From rock bottom prices on laptops and TVs to unbelievably priced shares in the stock market. Your dollar can go a long way during an economic recession.

All in all, we may be facing some tough, stressful times, but we are becoming more human again and that as they say is priceless.

The other day I shared a video from Branson on how it is the small businesses owners responsibility to create wealth during these troubled times. While thousands more people are welcomed to work with a pink slip every day, the entrepreneur is able to create wealth virtually out of thin air.

Historically during slowdowns and economic slumps, people tend to do one of two things:

1. Go Back to School
2. Make Their Own Money

During the last Great Depression, more than 25 percent of the nation’s workers were jobless. Those who managed to keep their jobs on average lost 43 percent of the wages. The difference back then is that people did not over-extend themselves like they do today.

Siblings shared bedrooms in reasonably sized houses, and credit cards were not used as another source of spending money. Unfortunately those statistics today would cripple most American families.

The good news is Americans are resilient, we are survivors, and our economy is designed to allow anyone and everyone the opportunity to create their own wealth. As Branson suggested, it is the small businesses that are nimble enough to find an opportunity and act on it.

A company like GM, for instance, can’t decide one day to close hundreds of plants and become an education company. But the teenager in his dorm room making hundreds of dollars online can suddenly decide to offer a service creating YouTube videos for local businesses.

Individuals and small business owners have the flexibility to come up with an idea, act on it, and profit from it that very same day.

Just by doing a search for “layoffs” on Google News, I found headlines from KB Toys, Volvo, CBS, DHL, npr radio, GM… the list seemed never ending. My family has been hit, and so have my neighbors. Everyone from business executives to the warehouse packer is losing their job, and with no hope for a new job in sight.

My brother, who I wrote about a couple weeks ago, finally ran out of options and had to move back home. Having lost his job, house and car, he was literally left homeless. My sister is about to have a baby, but her husband is unable to make any money in the mortgage industry and can’t find any other job.

Both of them turned to me for advice on how to make some extra money, and literally 3 days later my sister made her first $80. While this wasn’t a lot of money, it was evidence to her that it really is possible to make your own money.

Now rather than just being a stay at home mom, my sister spends part of her day “printing money.” It’s a bit frustrating for her husband because he puts in the long hours, but she’s more money without leaving the house.

The sad part is that it took a recession for my sister to realize that a “safe, secure” job was not the only way to produce and income for the family. But now they are able to sleep at night knowing there are ways to write your own paycheck, so to speak.

It’s funny because my sister always shook her head at the idea of owning a business, but she really enjoys making money online. I haven’t told her yet that she in effect started her own business.

See How to Make Money from Home…