7 Ways to Achieve Financial Independence

7 Ways to achieve financial independenceFinancial Independence is the ultimate goal in personal finance. Financial independence means you can do whatever you want without having to worry about money. Work will become optional and you’ll be the master of your destiny. Who wouldn’t like that? It is a worthwhile goal to shoot for.

Of course, most families have to take care of the basics first. The average US household has plenty of debt and not much savings. The 2020 coronavirus pandemic shows how vulnerable most households are. Many households are in big financial trouble after being out of work for a couple of months.

With all these problems, it is understandable why financial independence isn’t on the average person’s radar. Of course, our readers are way above average. If you’re reading this, you are well on the way to achieving financial independence. Even if you aren’t close yet, you already took the first step to educate yourself. Once someone makes financial independence a goal, amazing things will follow.

So how do you achieve financial independence? First, you have to take care of the basics. Consumer debt is a huge problem and you need to work on that first. It’s not easy, but you know it is possible because a lot of people have done it. After paying off those high-interest debts, you can take the next steps to financial independence. Here are 7 ways to achieve financial independence.

*This post was originally written in 2016 and updated in 2020.

1. Living a Frugal Lifestyle

The easiest way to financial independence is to control your expenses. A lot of people have no idea what they spend money on every month. They just see their paychecks come in and all that money is gone at the end of the month. I didn’t know how much I was spending on eating out until I started tracking our expenses in detail. It can be eye-opening to see where all your money disappeared to.

If you’re just starting out on this journey to financial independence, it is essential to track your monthly expenses. You need to bring it down or at least keep it steady so you will have a chance to build up some savings. Most people let their expenses creep up along with their increasing income. That’s the wrong way to do it. Instead, you need to minimize lifestyle inflation and funnel those raises into investments. The investments will generate income which will help propel you to financial independence.

Another reason why it is essential to track your expenses is because you can use it to measure your progress toward financial independence. The formula is simple. Financial independence begins when your net worth exceeds 25x your annual expenses. Of course, it would be nice to build in some margin if you’re retiring early. In that case, you should also track your FI ratio.

FI ratio = passive income/expense. This way, you know you have enough passive income to pay the bills.

Note: Living a frugal lifestyle doesn’t mean you have to be cheap. It just means you need to save and invest a large portion of your income. If you make a million dollars a year, you can live very comfortably and still save 50% of your income.

2. Grow Your Earned Income

For most people, a good career is the best way to grow their income. Some careers are particularly suited for the financial independence journey. These careers don’t take 10 years of education and the pay ramps up quickly over the first few years.

  • Financial analyst, investment banking, and other high finance jobs
  • Engineering and IT
  • Healthcare – physicians, nurses, and more.
  • What do you think is a good career for FIRE?

I think the engineering and the financial fields are perfect for early financial independence. You work hard in the beginning and promotions come quickly in those careers. In engineering, the pay scale levels off after a decade or so. After that, you need to take on more leadership roles to keep getting raises. The good paychecks are great for savers because you can start investing in your 20s. These careers have high burnout rate, though, so engineers need to prepare for early retirement just in case. I don’t have direct experience in high finance, but those people seem to make a lot of money early on in their careers.

I think a career in healthcare is great, too. Physicians, pharmacists, orthodontists, anesthesiologists, dentists, all make very high income. The lengthy education process leaves them in a big hole, though. I don’t think they could start investing until they are in their 30s. However, with the high pay, they could pay off their education debt and then start accumulating wealth very quickly. They just need to watch their spending and make sure not to ramp up their lifestyle too fast.

Anyway, you need to invest in yourself and get promoted early. Each career is different. It might take additional education, becoming an expert in a niche, working extra hours, and/or networking with the right people. Your paycheck needs to outpace your expenses so you can save and invest more.

3. Invest in the Stock Market

The stock market is a great way to build wealth. The stock market returns about 7% historically after adjusting for inflation. That doesn’t sound like much, but it will add up if you invest consistently over the decades. That’s the power of compounding and it is also why you need to invest when you’re young.

The easiest way to start investing in the stock market is to max out your 401k contribution every year. I started investing in my 401k right after I started working in 1996 and increased my yearly contribution to the maximum allowable soon after. It’s been 20 years and my retirement fund is now the biggest piece of our net worth. Compound interest really works, but you need to keep investing through both the good and bad years.

My advice is to max out your 401k first, then max out your Roth IRA, then invest in dividend stocks. If you can do that consistently every year, you will be very well off in 20 years or so. The stock market can be volatile in the short term, though.

4. Invest in Rental Properties

The stock market is great, but it can take years before you accumulate a significant amount in your portfolio. One way to build wealth quickly is through rental properties. I’m not an expert in this field, but here is a sample blueprint for becoming a real estate mogul.

  1. Buy a starter home and rent it out when you move.
  2. Buy a few more rental properties.
  3. Build cash flowing rental business and then get commercial loans to expand.

Once you’ve shown that you are a good investment, the banks will be happy to work with you.

I admit that I’m not a great real estate investor. You need to build a team and that’s not my forte. We have been pretty lucky with our rental because the Portland real estate market has been on good over the years. Our property is making a little money every month and the price appreciation is padding our net worth. I don’t think I can make the jump from #2 to #3 above, but a lot of other people could. Maybe you’re one of them.

If you don’t want to be a landlord, you can invest in real estate with REIT or try real estate crowdfunding. I started investing in real estate crowdfunding in 2016 and it’s been good. I haven’t lost money on a deal yet. However, 2020 will be a big test. The coronavirus hammered the economy and everyone is hurting. Some tenants can’t pay rent and some projects already suspended payout. This will hurt the ROI, but I’m still optimistic. In the long run, the economy should recover and those projects should come back.

You can sign up with CrowdStreet through this link if you’re interested in real estate crowdfunding. You can browse the investment listing and see if there are any interesting projects.

5. Start a Business

Building a business is probably the most difficult way to achieve financial independence. You have to work really hard and you probably won’t make much income for years. There is no guarantee that you’ll be successful either and many entrepreneurs never make it big. However, the payoff can be huge. Check the 100 wealthiest people list and you’ll see entrepreneurs dominating the list.

For most of us, starting a business is a very daunting proposition. I’m sure most people would hesitate to give up their regular paychecks and jump in with both feet. However, there are a lot of businesses you can start on the side now. I just heard a story on NPR about someone who started an eBay store and they make a very nice living. They drop ship the products from Amazon and assume very little risk. That’s just one way to start a business on the side. With all the new technologies in place, there are all kinds of interesting ways to start a side business.

I don’t recommend blogging as a business, but some people are making over $50,000 per month with their blogs! You never know what will work. Actually, blogging probably fits better in the next point.

*2020 might be a good time for some people to try starting a business. If you’re laid off and can’t find a job, why not try something new?

6. Create Intellectual Properties

Another great way to create passive income is to create intellectual property. Ernie Zelinsky wrote The Joy of Not Working and How to Retire Happy, Wild, and Free years ago and his books still generate over $100,000 per year for him*. I think this is the way to go for creative people. If you have a particular skill or talent, you may be able to turn that skill into usable products that would be purchased by those who want to learn from you. If those products have lasting value, you can earn royalty income for years.

*2020 is a tough year for Ernie. His book sale is down, but he isn’t discouraged. He is self-publishing a new book: The Lazy Person’s Guide to Success – Financial Independence and Personal Freedom Too! That’s amazing.

7. Earn a pension

Pensions are becoming rarer, but there are still jobs where you can earn a pension after 20 years. Police officers, firefighters, government public sector jobs, and military personnel are some of the professions that can help you reach financial independence. The pension plans for firefighters and police officers are local and varies widely, but I think most can receive a partial pension after 20 years of service. The military also has a good pension plan. Military personnel can retire after 20 years with 50% of their basic pay with healthcare coverage. However, some of these are high-risk jobs that might not be a good fit for everyone.

Readers suggestions

  • Inheritance
  • Marry rich
  • Make it big in the entertainment industry – Needs a lot of talent and luck.
  • Win the lotto!

These are great ways to get rich, but I don’t think they are really valid. You don’t have much control over these and the sudden increase in wealth makes it difficult to adjust. That’s probably why so many lottery winners become bankrupted a few years later. Marring rich is good if you can do it. 🙂

How we achieved financial independence

Our path to financial independence is primarily through the combination of modest living and investing. We are naturally frugal and never spent more than we made. We saved and invested in the stock market over many years and it added up. We also invested in rental properties, but we were already well on our way to FI by then. Lastly, this blog also brings in a little income to help pay the bills. Retire by 40 is a small business and a creative outlet. Hopefully, I can continue to build the IP and expand it in the future.

Start your journey

Financial independence can be a long journey, but you can get there in less than 20 years. There are many ways to achieve financial independence and almost anyone can take one or more of these paths above. You just need to make financial independence your goal and start working on it. I don’t think anyone ever regret starting this journey so don’t put it off.

What’s your path to financial independence? Is there another good way to get there?

Looking for an easier way to manage all your investment accounts? Try using Personal Capital for free to keep track of your finances. Personal will aggregate all your accounts and give you a great overview of your savings and investments.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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81 thoughts on “7 Ways to Achieve Financial Independence”

  1. Hi RB40,

    Great points,

    To your Point #3 re: investing in stock market. Few thoughts:

    As for current strategy I’d argue that you either protect your Stock Portfolio (in case of a shorter time horizon than yours – I know you hold only Equities) with Gold or with Aggregate / Core Bond Funds (mix of Treasuries, High Quality Investment Grade Corporates Bonds and Mortgage Bonds). But I would AVOID Treasuries at this point since they have downside risk and generate negative real returns.

    I have done some research around it and compiled all major ETFs and what comes out is that Aggregate Funds give you protection while generating 3% Yield.

    Gold is also not a bad bet in this environment. It reacts to a few factors: #1 Low Real Interest Rates #2 Weaker USD / Debasement #3 Further Economic Shocks
    #4 High Inflation (Above 3%) and #5 Retail & Central Bank Purchases. While #1,#4 and #5 are not good catalyst in the short term #2 is a great one and also you have no opportunity cost of holding Gold these days. It has done well as Equity diversifier over the past 30 years.

    For your readers that have a shorter time horizon and looking for Bond ETF here is a pretty comprehensive guide:

    All the best and stay healthy,

  2. Great post! The biggest issue people have on their journey for financial independence if living debt free. Buy a car, dont lease. Make extra payments towards your mortgage principal every month. Pay off all your debt before starting 1-7 and the journey will be that much easier!

  3. Great summary! Good thing is that anyone can try to implement points in 1 to 6 at varying combinations. To me FI journey is a lifestyle I enjoy. It’s not a bitter pill to swallow for certain years to achieve FI?

  4. Good article, it highlights the most important points.

    It’s simple in theory; cut costs, maximize income, invest, and have it compound over time. However, in real life, there are always things that complicate it 🙂

    I think it’s important to enjoy life and have fun along the way as well, even though (for me at least) the process of saving money and investing is also fun in itself!

  5. Joe, thanks for mentioning the new edition of my book “The Lazy Person’s Guide to Success – Financial Independence and Personal Freedom Too!”

    Just to confirm that I sent you a signed copy on Monday by airmail. But mail delivery is delayed both in Canada and the US so you should get it within two weeks.

    I hope you enjoy the book and it triggers some topics for your blog. Of course, if you want to excerpt from the book, be my guest. I am quite proud of the topic at the end of Chapter 1 titled “3C Vision Will Help Make You More Successful than 3D Vision.” I have coined the distinctions between 3C Vision and 3D Vision and hope that this topic becomes as well known as the “Dunning-Kruger Effect.”

    • Wow, Ernie Z! Your books were great to read. I don’t think you get recommended enough from the FIRE community, so here is my endorsement. Looking forward to your next book.

  6. The biggest thing in achieving FI is getting ‘the gap’ between your expenses and income to be as large as possible. That’s the only way you can save large amounts of money. It’s not mentioned in your post, but house hacking (owning a place and renting out rooms/other parts of the complex) is probably the #1 way to kickstart your journey…because if you can have housing for free, that cuts out a huge part of your living expenses.

    • Really good point @Late Start FI. Housing is your number one expense, well number two but most people don’t understand that. Either way getting this expense down to something reasonable is of paramount importance to FI. If you can do it through house hacking, and get your housing free or paid for you are well ahead of the curve. There are other ways to get free housing that provide more adventure as well. Everyone’s situations are different, but the important thing is to realize that you have options when it comes to housing.

  7. I remember readin in another one of your post that you make something like +$2200 each month on this blog, is that correct? Is that what you earn after taxes, fees, hosting, webadmin and whatnot etc?

    Thats what i make after taxes here in sweden, and thats 25% more than what i currently “need” (I save ca 25% to the stock market each month). A blog with traffic like this could make me independent, or at least self employed.

    • We made about $30k in 2016. That’s a bit down from 2015 and I’m going to push for $36k in 2017.
      Next week, I’m going to post – how to start a blog. You really should consider it. You never know what will happen. Some elite bloggers make over $100k per month. That’s pretty crazy.

    • @Andreas, Joe already responded with his actual numbers. Not sure how long RB40 has been blogging total, but you can see it’s been at least 4 years. I think the perception that you can make a lot of money blogging has been way overblown. The internet is crowded, and competitive. It will likely take many years of consistent work before you do anything but lose money. If this is something you really want to do go ahead, but realize that it is not easy.

  8. We are huge enthusiasts of the frugal lifestyle! We agree with you when you say “living a frugal lifestyle doesn’t mean you have to be cheap!” Being frugal is all about watching what you spend and double thinking about a big purchase or an unnecessary purchase before you go ahead and spend all that money! There are tons of way to live frugally while still having fun and making the most of your life!

    • @Centsai, love the name firstly. Totally agree with your comment. People mainly link spending money and happiness together because of marketing. The research on this topic is conclusive, and runs directly counter to this notion. Beyond having your basic needs met, and maybe a few wants here and there, money doesn’t do a heck of a lot for living a really good life.

  9. I think the reality is that the way to real FI is to pursue multiple paths simultaneously. After all, if you’re making a lot of money (path 2) you’ll need to remain frugal (path 1) to have money to invest in equities and/or real estate.

    For me personally I’ve worked at growing my income (sales & engineering) and then deployed money into investments. I usually reinvest that income back into more investments, but given the high valuations on the stock market and the historically low interest rate on bonds, I’m hoarding cash for now.

    I’ve written a few articles recently analyzing the stock market and the current valuation levels. My finding – you have to be an amazing optimist to invest at today’s levels.

  10. Joe, This is a good list. My path is #1,#2,#3, and #7. I’m exploring #4. I was fortunate enough to choose the business path, which has helped my top line. On career path, there is definitely high burnout in investment banking and consulting, but it lends itself to moving into a corporate position where you don’t need to work crazy hours to get ahead, and the skills you gain, including managing large groups, help maintain the value you bring for long term sustainability.

  11. Your list is right on, Joe. I would add one more item to the list, though it is not accessible to all nor is it a guaranteed way to FI – angel investment. This is an alternative to starting your own business. Investing in a growing high potential start-up can give a stock market-independent way to gain a large multiple return, but given the risk and significant due diligence involved, I wouldn’t recommend more than 5-10% of your portfolio equity allocation for this activity. This is best done as part of Angel investment club of like-minded individuals in your city or state (there are now associations for this). Collective wisdom of experienced angel pool can help screen potential winners from a big list of startups pitching for angel money. If this is of interest to you, I can write an article on how to do this right.

    • That’s a great one. I met someone who achieved FI through angel investing at FinCon. They live in SF. I recently saw a show on TV – Blue Collar Backer or something like that. It shows that you can invest locally too. That’s a very interesting show. I would love a guest post about angel investing.

  12. Hey great post yet again. I think the stock market is the way to go to become financially independent slowly but surely. Look at Warren Buffett. He’s a seasoned investor who simply realized the power of compounding interest. A lot of real estate investors will speak negatively about the stock market but I think you have really done a good job balancing both. Its good to be diversified into both and by using leverage in real estate it can still be very lucrative. My company has a pension but it isn’t as nice as the military. One of my keys perhaps #8 is to stay at your job for 30+ years. If you are a solid contributor and doing steps 1-7 you will definitely be financially independent. I liked on another one of your recent posts where you said one of your mistakes was retiring early! But the lack of stress is probably worth it.

  13. RB40 –

    Nice capture of how to reach financial independence. Looks like I’m cruising on Frugality, investing into dividend stocks, have a website that generates a few dollars (with some IP with our name); but still am thinking of other side hustles along the way. The rental property would be great, and that would take a much more strategic move/planning/research to go with it. Thanks again for sharing, talk soon!


    Also – pumped to see how your September turned out!

    • Good luck to both of us with the IPs. 🙂
      September was not good. We had a lot of expenses, mostly the Thailand trip…

  14. That is a very nice list Joe. It is inspiring to me and others how your journey has taken advantage of those tools ( frugality, job income, stock market, rentals, your blog etc)

    I have personally grown my wealth by being frugal, earning a decent salary, investing in the stock market, and hopefully getting a social security check in 30 – 40 years. Earning some money from the site has helped, though I am not as savvy there and have not really focused on it as a business ( more as a hobby).

    I would love to learn more about investing in real estate however. I would think that a building in a college town would generate decent returns over time.

    • Thanks! I think the way you took is the easiest way for most people. Almost everyone can do that if they invest in education and then live within their means. Real estate requires more work, but it seems a lot of people are very successful at it. It has been a good run for the stock and housing market, though.

  15. Hi Joe … I read about you in Business Week and did a speed read on your blog. I didn’t see any information about health care coverage for early retirees. Any insights here? Sure, one can buy health care on the exchanges set up under “Obamacare”. However, the cost inflation on those is such a risk at the moment. How do early retirees manage healthcare if either spouse does not have it through work? Thanks and congratulations.

    • That’s one thing we haven’t figured out. We are still on my wife’s employer sponsored insurance.
      ACA was good for the last 2 years, but the cost is rising very quickly.
      We probably will have to get a high deductible plan when we both retire. Or maybe move to a country with public healthcare. Thailand is one option. We can also try moving to Europe. Not sure if they’ll let us in, though…

    • Joe might have better advice, but I’m not sure there’s a great answer other than just plan for exponential inflation. We’re personally very luck to have Tricare health insurance from the military, which I think will be relatively reasonable in early retirement.

  16. Hey 🙂

    another good post from you.
    my path to financial indepence look like this:
    i started a business who will pay a nice income in a few months. all of this money will be used for my options strategy who makes 1-5% yield every month.
    I use this income from trading options to build a huge dividend portfolio.

    I am 24 years old now, but its work really good for the moment. If it will work another 5-10 years I will be financial independent in my 30s, maybe in my little 20s 🙂

    thanks for all your motivational blogposts, you are a real help 🙂
    best regards

    • Great job with your business. Good luck with your option strategy. The stock market is very uncertain at this point so it might be tough.

  17. Joe, glad to see you included rental properties as one of the ways!

    If you took all financially independent people and put them into one of these 7 buckets, I bet #4 is a way higher percentage than people think. It is not talked about enough, especially compared to the stock market, where everyone puts their money and few become financially independent from it.

  18. Our recipe has been a little bit of #1, a lot of 2 and 3, and a little dash of 4. 😉 I feel thankful every day that we got an early start on our 401ks, which has freed us to focus on taxable savings in the last few years, as well as buying our rental property. (Of course we still max our 401ks because we can, but it’s nice to know we don’t HAVE to anymore.) And we’re huge believers that increasing your earnings makes a way bigger impact than cutting all your expenses, though there’s no reason not to cut the obvious stuff. But no need to live a joyless, overly frugal life either — what’s important is spending on the stuff that truly makes you happy, and cutting the rest. 🙂

    • I’m very thankful that we started early with our 401k as well. Investing early is the way to go.
      I agree with you on increasing income. We just need to make sure we don’t spend it all so that’s why I always emphasize #1 first. It’s so easy to overspend.

  19. Really good summary! This is a great starting point for anyone who wants to reach financial independence. It seems to me that there are several categories that your advice falls into a few categories:

    1 and 2: Mandatory steps to stay out of crippling debt/poverty.
    3: Necessary for any hope of financial security.
    4, 5, 6: How a stable person gets to real financial independence.

    I’m leaving 7 out, since there’s a lot of nuance related to pensions. Perfect vehicle for financial security, maybe not the perfect vehicle for financial independence and early retirement.

  20. Lots of ways to get to FI it looks like. A combination of all of these is definitely one way to go about it as well. In my opinion, the likely easiest way is a combination of a good income (#2) plus living frugally (#1). If you’re in a high earning profession and can avoid the keeping up with the Jones’ mentality that typically happens, you can really get to FI very fast.

    • I think that’s the most realistic option for professionals. It’s too bad most people don’t pay attention to lifestyle inflation. They will be stuck in the rat race until 65..

  21. Our path was to get good jobs and live frugally. We also got a big boost by purchasing our home at the right time.
    If you do things right, you should be able to achieve financial independence in well under 20 years.

    • Good job! I think 20 years is a good number because there are always hiccups along the way. If you’re lucky, you can probably do it much quicker. Good point.

  22. Great post!

    Regarding engineering career, especially in computers and high-tech, the burn-out is quite rapid now than it used to few years ago. This is due to super fast pace of technology advancement and ever increasing and aggressive competition and employee rating evaluations. It’s not even fun to work in technology anymore even as a young engineer because you are constantly worried about losing your job and trying to get ahead of your peers. It’s a rat race.

    Also, there is no job security at any age in this profession as companies are constantly looking to lower their cost by shipping jobs oversees or replacing existing employees with younger and cheaper talent.

    Finance/Business is probably a better profession and more portable than engineering.

    • Yes, the burnout time is very fast now. Employers have way too much power and their demands are ridiculous. They want to burn you out so they can hire younger engineers who are cheaper. Engineers are just widgets now. Everyone can do your job.
      I think finance is better too.

  23. Mine was “easy as 1/2/3” — all in roughly equal measure.

    On #2 I think your point about the front loading of steep raises is a critical one, even if risk grows on the back end. So I think “similarly good careers for FI” would include the performing arts. But there are two shortcomings to this path (1) the odds of becoming a world-class player are far smaller in sports, music, or movies than it would be in engineering/finance and (2) even if you hit it big, most superstars have difficulty managing the financial side (Oprah and Michael Jordan being the exceptions) so when the phone stops ringing the money rapidly runs out. By contrast most engineers and financial types have the aptitude to grow their savings (or at least hang onto them).

    In my view aiming for and reaching FI status quickly is more a necessity than an option for a career in engineering or finance. The reason is that as you pointed out, these arenas are highly youth-centric so the outlook for the median career diminishes dramatically with age. So it’s important to take those early paychecks and immediately put them to work as investments. Put them into lifestyle creep and your middle-aged self may seriously regret it.

    • Oh, you mean a career in entertainment. That’s tough. Only a few lucky/talented people can make it big quickly. A lot more people can go into engineering than making it in the entertainment business.
      I agree with you about FI being necessity for these careers. Most people can’t stay in these field for long.

  24. Joe, I always enjoy your posts! A couple of thoughts:
    1. Another career that is pretty quick to get into, for people with skills in logic and fairly simple math is I.T. (Information Technology), which includes a range of jobs.
    2. I have a tiny pension from one early job, and for a long time I envied people with “good” pensions. Then it dawned on me, pensions, unlike most other forms of wealth, cannot be inherited! So when I die, my pension will die also, and my kid will get nothing from it. I’m so glad that I never relied on it and instead worked on saving and investing. (There is a way to make a pension pass to a surviving spouse, but it is NOT advisable, since it reduces the amount of the pension considerably, and can never be changed once initiated, regardless of circumstances. Unfortunately, I learned this from experience. )

      • Some pensions have an optional survivor benefit. This typically only covers a surviving spouse, and taking the survivor benefit will reduce your pension.

        Children are sometimes covered with survivor benefits as long as they are under 18. Since most pension plans require you to be at least 59.5 to retire, it’s unlikely that many pensioners will have dependent children, as that would require:

        1. You had children after you turned 41.5 years old
        2. You die in the window before your kids turn 18
        3. You are either single or your spouse dies
        4. You elected to take the survivor benefit when you retired

  25. Intellectual property is one of the steps you list. This list of 7 ways to achieve financial independence look like chapter titles for your next book to me.

  26. 8. Get your family onboard. I you don’t have buy-in from everyone with access to your money, you will swimming upstream against a strong current.

    If you’re single, it doesn’t matter yet, but keep this somewhere in the back of your mind. If you earn a good salary, some people will find that attractive. I don’t know this from experience, but I heard it in a Kanye song.


    • Working toward the same goal is extremely important. I don’t know about FIRE when you’re single. Life has way too much uncertainty at that point. It’s still good to try, though.

  27. Great list. Thanks!

    The real power comes when you are able to mix and match from this list like you have. You can make choices to put more focus and attention in one area in order to be able to ease up a bit in another. Don’t want to cut spending any more? Work on increasing income. Can’t increase income in your 9 to 5 anymore? Start a business.

    Personally I spent a lot of time early on 1 until I got that on autopilot. Then I turned my attention to 3 until I got that on autopilot. Lately I’ve been working on 2, but eyeing 5 and 6 as options in the future.

    • I like mixing and matching too, but I suspect concentrating in one area probably would be better. For example, if you’re really good at stock investing, you don’t need to do the other things. I think #1 is still essential, though.

      • I think it depends on your personality. I find that I’m good at the first 90% of things I do, and then I lose interest in the last 10%. For me it’s easier to do 5 things 90% well than try to be the best.

        For those who can be the best though, the rewards are great. There’s not a lot of value in Tom Brady learning about real estate investing. He’s done extremely well focusing on being the best football play in the history of the world. (Not so objectively speaking from me, of course.)

  28. Agree on the healthcare angle. With a basic scientific degree and 5-8 yrs experience, an employee in pharma / biotech can be easily over six figures. With a Ph.D, the numbers increase significantly. Many pharma companies also support employees who wish to shift career and do an MBA while employed and in business dveloment side of pharma, salaries rise even higher. And of course a whiole lot of stress….which heightens the desire to pull the plug…..

    • I love that you mention the sciences especially biosciences. I am a biochemist who just started my career after my PhD. One of the things they do not mention is that while you can get a good job in pharma without a PhD, you can advance only so far without one, sometimes maxing out at associate. You can make upper 5 figures with that, but not the $90,000 median everyone reads about commonly. Now you almost need the PhD and the starting salary is only $50,000+ in the first few years if you are lucky. I know some who work for $30,000, granted they are postdocs, industry is different. As for 6 figures in 5-8 years, it is possible, but it is more likely you will make upper 5 figures, usually $80,000-100,000. You almost certainly have to work closer to 10+ years after graduating and work at a good firm to make 6 figures easily.

      Before anyone says it, I know it’s sooooo tough to make only $50,000 figures in what is normally a stable industry (extreme sarcasm notice). Trust me I know how lucky many of us in the pharma industry are. Plus I do not find many people who work in the same area as me to be unsatisfied with their work. I recommend biosciences, but only if you have the knack for it and the will to put in the mental, emotional, and when necessary physical effort. It is never an easy career path. Anyone who becomes a scientist purely for the money will be burned out within a few years, more than likely even worse.

  29. Thanks for the great summary! I think it’s important to focus on the basic building blocks and you’ve done a wonderful job listing them here. I’m also really excited that you mentioned the intellectual property route as an option. I agree that this approach is an intriguing angle with a lot of potential upside. Plus, it’s fun! 🙂

    • I think you have to be a bit lucky with the IP angle, but when it works, it’s awesome. It’s a great way for creative people to reach FI. The other ways are more business oriented.

  30. Great insight Joe, we have completely halted lifestyle inflation for a year and a half and we’re saving 50% of our raises before that – it has been the biggest driver of our savings rate.

    I cringe a little when I hear people talk about new purchases during raise season.

    • That’s the way to go. Lifestyle inflation can destroy any amount of income. Everyone need to put saving and investing first. It’s fun to spend in the short term, but that lifestyle can’t last. Thanks for the comment.

  31. Good point about lifestyle inflation. After the crash in 2008, I see many are back up to their roles as spenders with new luxury cars, big homes, remodeling, etc. Throw in a few kids and it’s living month to month for many. The job market still seems shaky. Do they ever learn? I guess somebody has to buy all that stuff! Great post!

    • It’s been a long time since 2008. People forget… It’s too bad because we will run into a recession again at some point and people won’t be ready for it. The next one is going to be tough.

  32. This is a good summary Joe. For us, it has been about keeping the lifestyle inflation at a reasonable level, growing the career, maxing the 401k and HSA, earning a pension and then now, trying to build some intellectual property with the blog.

    I like the idea of rental properties, but valuations have been so high in our area recently. I’m keeping an eye out for a good deal though.

    • That sounds great. I think everyone can do it that way and that’s what we did for most of our career. Real estate will come down at some point. You have to be ready when it does.

    • There are a few great blogs like Rental Mindset and Out of State Investor about people who invest in real estate outside their area. It’s a little more difficult (we’ve managed property thousands of miles away), but it’s not impossible if you know a place that works.

  33. Pensions are pretty nice due to the reliability and also because it’s automatic and can’t be turned off or drained early by the employee. I never had a pension but my employer at least had a generous 401k contribution which had helped fuel my FI.

    • The problem with pension is that it could take a long time to get one. The ones I mentioned are nice, but some of those jobs don’t pay that well at the base level. You have to climb the pay scale for the pension to be good.

      • Mr. Mt retired from the Army and it has it’s pro’s and con’s, but for us has been a huge win. The starting wage was crazy low ($1000 a month plus housing). But we now have a steady flow of income and great healthcare. Adding in some rental income, investments, a super low monthly nut and we are basically “work optional.” I’m sure we will have paid employment again, but we have enough that we could get by. It’s nice to be able to be more picky about the work we take.

        • The low wage is the biggest problem with #7. If you work hard and get promoted, then the wage would be more acceptable when you retire. Right? The healthcare is great too. That’s the biggest problem for early retirees.

    • I didn’t include that because you have no control over it. And sudden wealth doesn’t seem to last. I’ll add it as a reader suggestion at the end of the article. 🙂

  34. Fantastic post, Joe! Very logical sequence – everything starts with living within your means, then growing your income, followed by investing.

    As of today, my FI path has been #3. I am investigating #4 now.

      • True, Joe! If the market falls, that would be good for me. I would buy into it for the long term. Interest rate follows growth.

        With sluggish economic growth, I would expect the interest rate rise to be very gradual.

        As long as interest rates are low, there is free money (low borrowing cost) for anyone to start a business. As you said, it comes with its own risks.

    • I think starting a business is a great way to achieve FI. You learn so much and you can leverage it into new businesses or new career. It’s not for the fainthearted, though. Good luck!

    • As the article states, debt is a huge problem. America, as a culture, needs to fix its mindset. It’s engraved in our culture… spend spend spend… and when you can’t spend anymore, BORROW!

      The debt spiral is not for me, and I prefer living a life not owing anyone anything. I’m just gonna make smart decisions with my money so I don’t end up with an empty bank account:

      1) Paying off my debts as they come to me. Never holding a credit card balance longer than a month. If this means living in a small studio apartment and eating ramen, rice, and beans, so be it.

      2) I will always buy small, fuel efficient and durable cars. I drive a 2006 Honda Civic now. It costs me nothing to fill up and next to nothing to insure ($25 a month from Insurance Panda… woohoo!). I will not drive when I don’t need to, and use public transportation whenever possible.

      3) Developing multiple revenue streams. Doing side jobs. Building up small businesses. Doing contract work. Basically doing whatever I can to generate income from multiple sources.

      4) Grow my revenue and assets no matter what. Make sure I am always expanding and develop them to the point that they consistently generate reliable cash flow.

      5) The most important one – make as much as I can. Save as much as I can.

      iPhones… ecigarettes… Starbucks… Chipotle Burritos…new clothes.. organic lipgloss… expensive yoga classes. Why not try living in your means for once? No wonder we have a debt crisis


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