Retire at 40: A 24-year-old in pursuit of financial freedom

The way Thomas Frank looks at it, everything in his young life has been leading him to get better at controlling his finances. In high school, he saw a cool video game he wanted to buy — no, had to have. It took him three weeks to earn the $350, but he actually spent it buying cool clothes and hanging out with friends instead.

His Key Takeaway…

You can have money or you can spend it — but you can't do both.

All the fun times he had being social at the expense of saving money added great happiness to his young life; but when he went to college, he realized he barely had any savings left. Again, he came face to face with the reality that money spends easily, very easily.

Student Loans Weighed on Him

He pursued a degree in Management Information Systems at Iowa State University and paid his way through college thanks to a combination of part-time jobs on campus, a few scholarships, money saved from internships, freelance web design contracts and his blog, CollegeInfoGeek.com.

And despite all that effort, he still needed a student loan to complete his degree. Although it wasn't as much debt as some of his fellow students carried (less than $15,000), it weighed heavily on him.

The Intrigue of Financial Freedom

Remarkably, though, he graduated in 2013 (just after the Great Recession) with no student debt — a testament to his desire to gain better control of his financial life.

The reason is that, while in college, he began to read about personal finance. He devoured books by Robert Kiyosaki and our own J.D. Roth, as well as GetRichSlowly.org and other personal finance blogs.

What caught his interest most were tales of people like Chris Guillebeau, Colin Wright, Steve Camp, and others who traveled the world, free as birds.

The thought that people, young people even, could reach a point in their lives where they could do anything they wanted (“crazy things,” to use his term) and not be concerned about money, inspired him. It wasn't the travel, necessarily. It was their freedom, their complete financial independence that gripped Thomas.

That's what he wanted; but to reach that goal, he would need to exert even more control over his finances. And by his own admission, that wasn't his strong suit, so he looked for solutions that would eliminate the temptation to use his funds. Naturally, he turned to technology to help automate managing his money.

Here's what he did …

Automating Payments to Achieve Budget Goals

Thomas doesn't keep a strict budget. He drew one up, but found it just wasn't in his makeup to watch every penny. Instead, he decided to focus on the big numbers and worked his way down to smaller amounts.

Mathematically, the largest number was his income. He realized that finding ways to increase his value would allow him to raise his income in the future. Pursuing a college degree was that kind of investment. But he was satisfied with the progress of his online business to help him get out of debt, so he looked next at the big expenses in his life.

  • Based on those numbers, he set a goal for how much he needed to set aside every month, first to get rid of the student debt, then to save.
  • To minimize rent and utilities, he moved in with friends where his rent would be minimal.
  • For wheels, he stayed with a low-cost, used car.

As he put it, he's not super-frugal like Mr. Money Mustache and others; but his mother taught him how to live frugally, and it helped that Iowa is not an expensive place to live.


See if your state is among the best states to save money and get ahead.


When he was still in college, the urgency to pay off that debt added motivation to set a goal and stick to it. But once the debt was paid off, the habits he formed allowed him to continue setting money aside, only now it was to start adding to his own saving account, not to pay back his debts.

Automating his payments was the ultimate solution for Thomas. He scheduled the money to be taken out of his account the day after he gets paid. Of course, there were a few months when he wasn't able to meet his savings goal. Rather than becoming depressed or going to major recovery mode, he simply shrugged off those occasions as aberrations and maintained a forward-looking focus to maintain his momentum.

Life After Debt — Thomas's Best Tips for Saving Money

With the student debt paid off, Thomas turned his attention to becoming financially independent. Now, the focus of automating his finances is saving. He still uses the same system to make it more of a hassle to free up money for impulse purchases, like an impromptu video game or concert. The trouble of accessing his funds is worth it in the event of a genuine emergency, but not if he wants to make a purchase on a whim.

It's a system he devised after an honest assessment of his strengths and weaknesses. Here is his philosophy and strategy for saving money and getting ahead:

1. Maximize income and invest in things that can increase income further.

2. Set an expense budget.

3. Calculate the difference between income and expenses. Then set that amount aside at the beginning of the month and transfer it to your online savings account.

4. Automate the process as much as possible to remove the temptation to deviate from your goals.

His ultimate goal is to reach his point of financial independence when he turns 40, at which point he plans to retire, i.e., enjoy the financial means to do anything which grabs his fancy, without regard to whether it adds revenue or not.

What's your retirement goal? Tell us how you're saving for retirement in the comments!

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lmoot
lmoot
5 years ago

This is pretty much what I do. Keep the big things like housing and transportation down (and food, but I’m still working on that). Definitely find ways to increase your income. Even if you’re like me and don’t desire the high stress and responsibility that comes along with promotions and certain careers, you can choose instead to focus on having multiple streams of income. I work alot, but I have very low/ non-existant work stress which is important to me. I also made sure one of my jobs provides me lots of socialization to make up for the lack of… Read more »

Kyle
Kyle
5 years ago
Reply to  lmoot

+1 on saving up to afford any career I want. I feel restricted doing one job for 40+ hours a week. I want to program yet or build with my hands or help a small company I think has great goals and be able to tell them I’ll help them for cheap or give them free consultations. I have an unusually diverse set of skills I would like to use to help better the world not just one company in my area.

K.Seqeuira
K.Seqeuira
5 years ago
Reply to  lmoot

100% agree that automated savings is the key, but in months where a large expense comes, say some hefty car repairs, skip the savings for that month and move on. Keeping the mentality that your savings is a “no fly zone” will ensure it keeps growing, even those months you can’t put any extra in 🙂 Great advice!

Brian @ EverywhereOnce
Brian @ EverywhereOnce
5 years ago

We left our full-time jobs in 2010 at the age of 38 and have been traveling full-time ever since (I’m writing this from a national park in Croatia). One tip I’d add to those above is to avoid “lifestyle creep.” It’s very easy to upgrade houses and cars and your overall expense structure as you start making more money. Once you’ve gotten a taste for those things, though, they become very hard to cut back on. Luxuries quickly become necessities. It’s easiest to resist the temptation from the start. And it’s easiest to resist the temptation of bigger, better, newer… Read more »

getagrip
getagrip
5 years ago

I started my career with two pieces of advice. From parents, save for a rainy day. From my priest, if you want to be rich put away some of what you earn every paycheck and never touch it. I started with 5% of salary in my retirement account. Then when raises and promotions came, I tacked on a percent here and there until eventually it was 15% of salary over a decade later. Sadly I came somewhat late to many of the ideas of the PF community and could have likely saved a higher percent of my salary earlier with… Read more »

Bethany
Bethany
5 years ago
Reply to  getagrip

I’m also a late bloomer to the financial freedom bandwagon. While I could get mired in despair at my delayed start, I have a career that is not physically demanding, that I LOVE, where growing older is a benefit and has the potential for very high income (depending on the number of clients and hours you are willing to work). Barring complications, I could work (play really, it’s so fun) for many years using them to catch up. Working from home eliminates commuter and clothing costs (require a few suits). I feel lucky that I snapped to in time to… Read more »

Bryan@Just One More Year
[email protected] One More Year
5 years ago
Reply to  Bethany

@ Get a Grip & @ Bethany – I am another late bloomer here as well. Welcome to the club! 🙂

Thomas, congratulations on your early success and understanding the value of budgeting and automating your finances. Paying off your student loans is huge. I believe those practices alone will put you way ahead of the rest of the world in your PF journey. It is important to keep that focus and not let that darn “hedonistic treadmill” attack you!

freebird
freebird
5 years ago

Bravo, nothing beats starting early IMO. I followed a similar track after starting also at age 24 and hit my target of net investments = 33x annual living expenses by age 39. I continued to work beyond that point, just my personal choice. Life became much easier and work became less stressful once I no longer needed the paycheck. I’d say security in middle-age is well worth the sacrifices in my youth.

Stayc
Stayc
5 years ago

I’m all about balance in my life. I don’t want to sacrifice the present for the future as much as I don’t want to sacrifice my future for the present. At 25 I’ve bought a house, a new car, and paid for a wedding (and all in the last year). Sure I could have bought a cheaper house, but we bought what we saw ourselves starting a family in. Yes, I could have bought a used car, but I wanted a good car I could have for 12-15 years. I’m saving for retirement, and while it is a priority, it’s… Read more »

Edward Gate
Edward Gate
5 years ago

Well done Thomas.
It’s unusual these days to find
students that are saving.

People should understand that,
the earlier you save,
the earlier you acquire financial freedom.

Jerome
Jerome
5 years ago

I retired at 41 and the way we did it was basically what is described above but with small and probably personal differences. – do it together, talk a lot about with your partner (if you have one) about expectations and goals and take your time to get on the same wavelength. – there is almost never a need to do things quickly, but get started. – focus on earnings, as it is easier to earn more than to save more. – avoid lifestyle-creep (we found this to be very difficult!) – learn to invest, in a way which fits… Read more »

Alexander @ Cash Flow Diaries
Alexander @ Cash Flow Diaries
5 years ago

Thomas is on the right path however his decisions on what kinds of investments he chooses could make or break him. I much like Thomas am on a HOT mission to financial freedom and I will do it hopefully by 45 realistically speaking. Hopefully sooner if I get lucky. I am going to reach this goal through real estate investing which in my opinion has more potential to actually reach financial independence.

Ashley
Ashley
5 years ago

This is an amazing story! We recently became debt free and the first thing we did was set up our online savings accounts and automate a set amount each month. Now we’re looking for more ways to increase our income. Freedom is real!

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