The one-page guide to financial freedom

financial freedom

This year, I learned a lot about money. I think the biggest breakthrough I had in 2013 was to connect the ideas of personal and financial freedom. I spent a week in Ecuador talking with folks about this subject, and then I spent a couple of months putting my thoughts onto paper. I've done a lot of writing and thinking and speaking on this topic.

But you know what? I've come to realize that the essentials of financial independence can be boiled down to just a single page.

What is Financial Freedom?

Financial Independence occurs when you've saved enough to support you for the rest of your life without needing to work for money. You might choose to work for other purposes — such as passion and purpose — but you no longer need an income to meet your expenses.

To achieve Financial Independence as quickly as possible, follow the basic rule of personal finance: To build wealth, you must spend less than you earn. But instead of heeding the standard advice to save 10 percent or 20 percent of your income, practice extreme saving. Your goal should be to save at least 50 percent of your income — and 70 percent is better.

How to Achieve Financial Freedom

To do this, conduct a three-pronged attack.

To begin, minimize your spending. Because a handful of expenses consume most of your budget, pursue these first (and with the greatest vigor).

  • Choose a home in an area with a low cost of living. Reject the advice to “buy as much home as you can afford.” Buy as little as you need. Take out a small mortgage at a low interest rate. Repay it as quickly as possible. Don't be afraid to rent.
  • Reduce your use of motor vehicles. Walk, bike, or take the bus.
  • Prefer used instead of new.
  • If you can, do home projects or grow food yourself.
  • Self-insure whenever possible.
  • Spend purposefully.
  • Avoid debt.

Next, maximize your income. It's great to cut expenses and develop thrifty habits, but there's only so much fat you can trim. In theory, there's no limit to how much you can earn.

Finally, funnel your savings into investment accounts. Take advantage of employer- and government-sponsored plans first. Then put your money into regular investment accounts. Don't get fancy. Invest your money into low-cost diversified mutual funds. Ideally, choose a total-market index fund. Ignore financial news. Ignore the fluctuations of the market. Ignore everyone. Keep investing in good times and bad.

If you follow these three steps, you will become rich.

Staying Financially Independent

As you work and earn and save, keep score. Track your spending. Each January, conduct a review. How much did you spend during the previous year? How much are your investments worth? Have you saved enough to retire?

To determine whether you can retire, use the following assumptions:

  • You'll spend as much in the future as you do now. (In reality, most people spend less. But go with this.)
  • You can safely withdraw about 4 percent of your savings each year and your portfolio will maintain its value against inflation. During market downturns, you may have to withdraw as little as 3 percent. During flush times, you might allow yourself 5 percent. But 4 percent is generally safe.

Based on these assumptions, there's a quick way to check whether retirement is within reach.

Multiply your current expenses by 25. If the product is greater than your savings, you still have work to do. If the result is less than your savings, you've achieved Financial Independence. (If you're conservative and/or have low risk tolerance, multiply your expenses by 33 before comparing the product to your savings.)

That's it. That's all you need to know. That's the sum total of everything I've learned about early retirement over the past decade.

More about...Investing, Retirement

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Kathryn
Kathryn
6 years ago

when you say to multiply current expenses by 25 to see if you can retire, is that monthly expenses or yearly expenses?

Z
Z
6 years ago
Reply to  Kathryn

Annual

Beth
Beth
6 years ago
Reply to  Kathryn

It must be yearly! Let’s say your monthly expenses are $2000. You can retire on $50,000. Hooray!

Yeah, I don’t think so…. Let’s try $600,000.

Noah Juan
Noah Juan
6 years ago
Reply to  Kathryn

The monthly figure, i’ve read, is 300.
$2,000(per month) * 300 = $600,0000

Basically, 25 * 12 = 300.

Brian @ Debt Discipline
Brian @ Debt Discipline
6 years ago

I discovered the idea of extreme early retirement in 2013. I think the early in your career and life that you can start this, the easier it will be to achieve.

Dave @ The New York Budget
Dave @ The New York Budget
6 years ago

That’s absolutely true. However, I see a lot of middle-aged people who “give up” because they think that they got too late of a start. You can always make progress and improve your financial/personal situation in some way, regardless of age.

Neil Murphy
Neil Murphy
6 years ago

This is just great advice. The investment industry loves to complicate things, so you’ll depend on them. It’s great to see such simple advice disbursed so succinctly.

Beth
Beth
6 years ago

Good summary! For me at least, understanding the math is the easy part. Applying the math? Well, that’s another story! I’d love to be able to save 50% or more of my income for retirement, but I’m also trying to save for a home, continue to grow my emergency fund and give back to my community.

I think we do the best we can for our own circumstances and goals.

lmoot
lmoot
6 years ago
Reply to  Beth

I may be wrong, but I took it to mean save 50% for whatever your goals are…not necessarily ALL towards retirement. I mean, there’s life between now and retirement…and life is expensive so I assumed some of those savings would be used towards things like paying cash for cars and houses and education and vacations. Or maybe J.D. is just THAT extreme in separating the 50% from general savings, as all going towards retirement. In which case I’m with you sister…ain’t got a hope on that one.

Anne
Anne
6 years ago
Reply to  lmoot

Two more things occur to me regarding your savings rate, first how high your salary is. Higher earners would be much more likely to be able to get near the 50% savings rate.

Secondly, people who have chosen not to have children have great deal more discretionary income.

Beth
Beth
6 years ago
Reply to  Anne

Exactly. It’s easier to live on on half your income when you earn $100K than if you earn $30K. I don’t think it’s “easy” though — lifestyle inflation, peer pressure and all…

I think you can say the same thing about kids that you can anything else. You’d have more disposable income if you don’t have any — but you’d also have more disposable income if you never owned a car, never travelled, didn’t have a wedding, never gave to charity, weren’t a member of a church, etc. It’s all a balancing act.

Beth
Beth
6 years ago
Reply to  lmoot

I think for people who plan to retire early, it is necessary to put a higher portion of their income into assets that will generate income when they are financially independent. (As opposed to saving for a car, vacation, emergency fund, etc.) When I’m budgeting, I don’t count putting money aside for a large purchase as “saving” — to me, it’s spending. I’m just avoiding interest by “paying ahead” rather than paying off after the fact. I still say I’m “saving up for something”, but I don’t factor it into my savings rate or net worth. Er… It makes sense… Read more »

Sean Friend
Sean Friend
6 years ago
Reply to  Beth

I love this phrase you used:

When I’m budgeting, I don’t count putting money aside for a large purchase as “saving” – to me, it’s spending

Very great way to think. I love it.

ldk
ldk
6 years ago
Reply to  Beth

exactly! We’re not ‘saving money for a new car’, we are ‘planning to spend money on a new car.’

Anne
Anne
6 years ago
Reply to  Beth

Beth,
I do get what you’re saying about choices but I’m not sure having children is very analagous to buying a car or saving for a vacation. Those are one time choices and in some sense you can learn your lesson, change your mind and not spend your money there again.

Children tend to me a more permanent financial commitment.

Beth
Beth
6 years ago
Reply to  Beth

@Anne – Definitely not an ideal comparison! I was just trying to illustrate that we can always say “it would be easier to save if…” At the end of the day, we’ve all got advantages and disadvantages we have to deal with. What other people have is irrelevant.

For most people, having kids is a choice. Beyond basic needs, how much they spend on their kids is also a choice. Maybe you can’t change your mind about having kids (though some people do it), but you can change your mind about how you spend on your kids.

Beth
Beth
6 years ago
Reply to  Beth

@Sean – that particular “ah ha!” moment was courtesy of Gail Vaz Oxlade 🙂 I think she called it “deferred spending” or something like that. I was saving up for a new computer at the time — or, more accurately, budgeting x amount per month towards my future purchase.

lmoot
lmoot
6 years ago
Reply to  Beth

I see what you’re saying and I think you are right. I don’t think I’d ever A) Be able or B) Want to…save 50% towards retirement, but kudos to those who can and do! I guess that’s because my vision of early retirement will always include some small amount of work…even if only a few months out of the year. Hmmm…now I’m honestly questioning if my goal was ever to be FI. I always want to aim for not having to work if I don’t want to or can’t (in a way that I can afford to not work yet… Read more »

Dave @ The New York Budget
Dave @ The New York Budget
6 years ago

Financial Independence is pretty straightforward, right? I am convinced that when you continuously study, learn, and think about your personal finance, you can’t HELP but achieve your goals. I have started saving over 50% of my income and it feels fantastic!

Alea
Alea
6 years ago

Same here, the more I educate myself financially, the more money I manage to save. The more I saved the more motivated I was do do better. A “vicious cycle” I have no desire to disrupt. :o)

FrugalTeacher
FrugalTeacher
6 years ago

Ha! What an awesomely concise article on financial freedom! This is the year I started focusing on retirement, despite having the goal of paying down 62k in student loans over the next 3 years. It’s strangely (but awesomely for a high school math teacher) addicting.

Like I wrote in a recent post, it’s one thing to say “I’m going to pay off my loans by age 30.” It’s a totally different thing to say “I HAVE A PLAN to pay off my loans by age 30.”

Same goes for retirement and this post provides an awesome start!

FI Pilgrim
FI Pilgrim
6 years ago

Great write-up JD, financial independence is worth the effort, in my opinion, and is easier to achieve than most of us think.

lmoot
lmoot
6 years ago

I don’t know why but I always enjoy these “back to basics” type posts. It’s like the PF equivalent of comfort food. It’s so familiar, simple, and the truest path to financial independence. Even though it’s stuff I already know, I still love reading it….it reassures that you don’t have to have all of these exotic practices in order to successfully reach FI. I’ve finally reached a position to where I consistently save 50% of my income (since October). It took some major changes in the course of 1 yr such as getting a part time job, renting out my… Read more »

Toodeleedoo
Toodeleedoo
6 years ago
Reply to  lmoot

You are not alone! I also have moved in with my parents and rented out my condo. I still pay rent to mum and dad, so it gives them a little extra to add to their retirement income. I also help around the house so I am definitely not freeloading or taking advantage of anyone. We all like each other’s company and my mum is an awesome cook! My condo will be paid off in 5 years. I will keep it another 5, to bring in some income. I will then probably sell it and buy cheaper somewhere else. By… Read more »

Kristin Wong
Kristin Wong
6 years ago
Reply to  lmoot

Nice! I think when you’re in control of your finances, those things don’t feel like sacrifices because, well, you’re the boss of your money. So they’re more like opportunities.

I hope you’ll keep us updated on your goal progress. I’m really interested to learn about your transition into your dream job/lifestyle, though I already have a feeling you’ll be quite successful!

lmoot
lmoot
6 years ago
Reply to  Kristin Wong

Thank you very much Kristin. I hope I will succeed. GRS definitely helps keep me motivated.

freebird
freebird
6 years ago

I think this is great advice, the only thing I would add is start NOW. Compounding returns is powerful leverage on early money. Don’t wait until your income grows to a comfortable level, your peak earning years will overlap your early retirement target date so any savings at that time will not get a chance to grow. For example every dollar you save at age 21 is equivalent to $16 saved at age 47 assuming an 11%/yr growth rate. Popular wisdom says to make your financial mistakes early in life so that you have time to make up for them… Read more »

jane savers @ solving the money puzzle
jane savers @ solving the money puzzle
6 years ago

That one page says it all.

I am sending it my university aged sons and I will print it and put it on my fridge.

I bet most people think that saving 50% of your income is possible but, unless you are low income, it is possible.

Joe
Joe
6 years ago

Tracking your spending is essential. You’ll be able to see where all your money is going. Then you can make a change.
I think 25x annual expense is a little bit conservative. I guess it depends where you are in life. If you’re 60, then it’s plenty. If you’re 40 and have a kid, then it’s probably not enough.

Peter
Peter
6 years ago

Saving this article to my money folder. Everything here is true I believe. It’s one thing to read this article and to agree with it, but it’s quite another thing to follow it.

El Nerdo
El Nerdo
6 years ago

I read this much earlier this morning and I wanted to just post a big loud “NICE!” and leave it at that. Then I realized it was a kind of waste of space to do that so I came back later to see if I could add anything after some comments. Turns out I really just want to say “NICE!” because, damn, great article, and it needed to be said, even if it adds nothing, but it needed to be said. NICE! And I don’t mean it in the kind of conversation-filler way, I mean it as a way of… Read more »

Tyler Karaszewski
Tyler Karaszewski
6 years ago

Reduce your use of motor vehicles. Cool, sailboats are still allowed! My current goal is a semi-early semi-retirement. I’d like to have a paid-off house at 50 and then reduce myself to a part-time schedule (though doing the same general type of work I do now). Exactly how I accomplish the part-time schedule, I’m not sure yet. I’m 32, I’ve got some time to think about it. Next year I plan on getting a 15-year-mortgage to help with the paid-off house thing. I’m also contributing the maximum allowed to my 401k. I also realize that at 32, my “current goal”… Read more »

Tyler Karaszewski
Tyler Karaszewski
6 years ago

Oh, and one more thing I’d like to mention: for me, and what I’m trying to accomplish, I don’t think tracking your spending matters at *all*. All that matters is savings. If I get a 15-year-mortgage and max out a 401k for 15 years, at the end of 15 years I’ll have a house and a million dollars (ish). It doesn’t matter if I don’t spend another dollar or I spend $500,000/year. Either way, I have a house and a million dollars or so at the end of 15 years. Clearly this is different if you’re goal is to simply… Read more »

Ramblin' Ma'am
Ramblin' Ma'am
6 years ago

Tyler, we’re about the same age and my goals are similar. I really like the phrase “semi-early semi-retirement”! Things like Tim Ferris’s four-hour work week don’t hold any appeal for me. I live alone, so if I wasn’t getting up and going to the office every day at this point in my life, I’d go nuts! My goal right now is to buy a condo in about two years (I’ll be 33), pay it off by my early 50s and then maybe switch to working part-time, mixed in with travel and volunteer work. There’s a guy in my office who… Read more »

kathyglo
kathyglo
6 years ago

I am curious as to why retirement income such as pension and Social Security is not included in the calculation. Is it because this can be taken away? I do believe that most people are considering these income streams as a foundation of retirement.

El Nerdo
El Nerdo
6 years ago
Reply to  kathyglo

Seems to me SS is only available only at a certain age, and therefore shouldn’t be counted towards early retirement. So I imagine it would come as a bonus further down the line. This independently of what one thinks about it or its future.

Leah
Leah
6 years ago
Reply to  kathyglo

Kathy, there are also plenty who worry that SS can be taken away/go insolvent at any time. While I hope to have SS and am not too worried, I’m not planning on SS. I am trying to save enough on my own for retirement. If I get to retirement and have SS and my own savings, all the better!

Sean Friend
Sean Friend
6 years ago
Reply to  kathyglo

Exactly what they said ^.

SS for those 45+ might be a reality. I’m 24. Based on the current state of affairs I am expecting social security in the double digits if anything.

stellamarina
stellamarina
6 years ago

Before you start extreme retirement it would be a good idea to make sure you have worked enough years/points to ensure that you will be able to get SS. Even then, early retirement will mean less SS when the time comes to collect because you will no longer be gaining more points.

Mrs PoP
Mrs PoP
6 years ago
Reply to  stellamarina

From our perspective (one that’s headed toward financial independence somewhere in our 30’s most likely), we view social security as a tax we pay while we generate income, not as a structured savings/annuity/insurance plan for many many years in the future.

I *think* that view is relatively common among younger folks seeking early financial independence.

Edward
Edward
6 years ago
Reply to  stellamarina

The idea behind financial independence is that you have enough to not even need SS. You can give it the finger if you want. The word “independent” means without help from anybody.

Carla
Carla
6 years ago

The sentence in this post that’s more relevant to me is, “Become better educated” which is linked to an article from 2008. I vaguely remember reading it then but the content is more relevant to me now. At 35 I will be restarting that process next week. It will be a very long process that’s more of a gamble than guarantee that it will lead to financial security, but at least I will enjoy the process. DH made the decision to go back for his PhD in Education since his MA in the same subject keeps him tied down to… Read more »

NateNate
NateNate
6 years ago

I would like to add my wife and my definition of financial independence – when our income from our investments/rental properties/lifestyle business is greater than our expenses.
We figure that if we pay off a couple school loans and increase income from said investments, we can “retire” to financial independence and never work another day in our lives…it’s not work if you love what you do!!

Nate @ TheyBuyTime
Nate @ TheyBuyTime
6 years ago

Excellent!! We saved > 60% of our income last year. When you first start “extreme” saving — I found it takes about 3-6 months to get the budget (line items where all the money is getting ready to go) “right”. “Right” = a balance between saving and quality of life. NOW – quality of life can be achieved MUCH more cheaply than people realize 🙂 For example: I ride the express bus into work everyday — this actually INCREASED my quality of life (I can read and chat with new people in the morning). Cost = $110 a month. This… Read more »

Beth
Beth
6 years ago

I would love to hear more detail on how you do it 🙂 As a singleton, I don’t think I could save that high a percentage without drastic changes. (Like moving to somewhere in the U.S. where housing and taxes are a lot cheaper.)

Toodeleedoo
Toodeleedoo
6 years ago
Reply to  Beth

I agree. For me the drastic change was moving in with mum and dad and renting out my condo. Not for everyone, but when you have a goal in mind the sacrifice is worth it.

Cujo
Cujo
6 years ago

It’s easy, just save half of what you make. I’m reminded of the old Steve Martin bit about how to make a million dollars without paying taxes. “First, get a million dollars…”

I make a good living and save aggressively myself, but sometimes I read stuff like this and can’t help but feel bad for the many people who barely make enough to survive, much less save anything, much less save half of what they make. People for whom a lot of these suggestions (e.g. taking the bus instead of owning a car) aren’t voluntary.

Trinity
Trinity
6 years ago

Is that 50% – 70% of income after tax or before tax? I cannot imagine saving that much before tax because my federal, state, and property tax eats about 30% of my income.

Jacq
Jacq
6 years ago
Reply to  Trinity

Trinity – generally when people aiming for FI talk about their savings rates, they mean after tax.

Beth
Beth
6 years ago
Reply to  Jacq

But doesn’t it depend on the savings/investment vehicle? For instance, $5000 put into an RRSP is technically “before tax dollars” because we get a tax refund now and then pay taxes later. The gamble being that you’ll pay less in taxes in the future. Whatever sum of money your RRSP grows to, the government takes its cut.

On the other hand, $5000 put into a TFSA is “after tax dollars” because there’s no tax refund but no taxes to pay later. I’ve seen a couple of compelling articles about using TFSAs to build a tax-free income stream for retirement.

Evan
Evan
6 years ago

When savings are calculated for the 25x calculation does that include all assets, real estate, 401k, roths etc or just investable ‘cash’ savings/funds which can provide an immediate dividend?

Sandi_k
Sandi_k
6 years ago
Reply to  Evan

It typically means invested assets that throw off income for living.

Real estate does not typically provide income, i.e., you cannot draw down 4% per year for living expenses (of course, if you had rental properties that produced more income than they consumed, that might qualify).

But typically it would mean retirement accounts, wherein you could liquidate 4% per year.

Andre
Andre
5 years ago
Reply to  Sandi_k

If the rental yield on the property you live in is higher than 4%, then yes, real estate does provide an income which you “draw down” every year for living expenses. In case you weren’t aware, the point of having cash is to buy things, such as the right to live in a house. Bypassing the cash doesn’t change the nature of the investment and its income. Of course real estate is not always a very good investment, but neither are government bonds, which were the doom of many people throughout history.

Jacq
Jacq
6 years ago

Good article, only issue I have is that you use the terms financial independence and retirement interchangeably throughout the article and they’re not the same thing. This is probably due to the popularity of male bloggers recently calling themselves retired vs. calling a spade a spade without fuzzy logic: self-employed / authors / stay at home dads with working spouse… (Not sure why it’s always the men that tend to do this.) It’s not something that really matters except in the context of your planning. See the comments from TMGbooks on this post for what I mean: http://blog.canadian-dream-free-at-45.com/2011/07/13/that-damn-r-word/ Getting the… Read more »

Georgina Goosen
Georgina Goosen
6 years ago

Simple is definitely the best. May I wish you a prosperous New Year and to all your readers. To those who are already retired like me, I would say: Keep up as many of these good precepts as you can while still enjoying your winter years. Thank you for the motivation.

El Nerdo
El Nerdo
6 years ago

Been reading the discussion re: saving 50-70% of your income and I wanted to collect my replies in one comment. Saving a high percentage is only if you want quick financial independence (70% will get you there in 5 years). If you save less, it just means you get there slower. Not everyone can or wants to get to FI in 5 years, and that’s fine. I’m one of those who doesn’t make a lot of money and couldn’t save 70% (I chose voluntarily to work independently in the arts) and in a way it’s like being financially independent already,… Read more »

lmoot
lmoot
6 years ago
Reply to  El Nerdo

Like + 1000

Cujo
Cujo
6 years ago
Reply to  El Nerdo

Not necessarily disagreeing (though you should be really careful with this kind of blanket generalization) but this is worth reading: http://www.huffingtonpost.com/linda-tirado/why-poor-peoples-bad-decisions-make-perfect-sense_b_4326233.html

El Nerdo
El Nerdo
6 years ago
Reply to  Cujo

Bit late to reply, sorry. I read that article. Found a bunch of excuses/ curable ignorance– I’ve been there too. No credit/debit card – the patriot act? really? Depression – there are mental health clinics for the poor (I’ve used them) Cockroaches – reuse jars/cans/containers/ziploc bags/don’t make broccoli if you can’t Money orders are at every post office “Breeding” -there are clinics beyond planned parenthood and Walmart sells $4 generics She got WIC Cigarettes – 100% excuses (learn to meditate or something– meditation is not for “the rich”). etc. There are a lot of responses to the original article that… Read more »

Troy
Troy
6 years ago

JD States “Financial Independence occurs when you’ve saved enough to support you for the rest of your life without needing to work for money” This is ONE way. One thing that irritates me about typical PF blogs is the un-original save, invest, and then live off the savings though process. While it works, it is only one of several ways. And the other ways are usually faster and better The real goal which is glossed over is cash flow. That is what matters. Assets and a large nest egg only matter insomuch as they create cash flow. So lets re-set… Read more »

Beth
Beth
6 years ago
Reply to  Troy

I think assets are included because some PF bloggers like J.D. don’t plan to leave any money behind when they die. In other words, they won’t be living on passive income alone — they’ll be drawing on the principle as well. That withdrawal rate is part of their future income.

Jacq
Jacq
6 years ago

I’ve been thinking about why this article, although a decent intro and factual – left me cold. “How to get to FI” is really simple and boring and can be summarized in about 4 characters – LBYM. It’s the why that’s everything. Paraphrasing Nietzsche: “He who has a why to save, can bear almost any how.” Maybe some people that don’t have the FIRE (pun intended) for it, don’t have much experience with things like an overflowing BS bucket (see this for what I mean by a BS bucket): http://www.early-retirement.org/forums/f28/how-many-of-you-can-re-now-but-are-saving-to-raise-your-std-of-living-20605-3.html#post381043 Or spending years (yes, years!) calculating what-if’s and various scenarios… Read more »

lmoot
lmoot
6 years ago
Reply to  Jacq

You speak the truth Jacq. Boredom/ desperation breeds creativity and action to the fullest. The day I realized I was OVER my daily routine and wanted change I could not be stopped. The scribbles and notes of my plot to escape looked like something out of “A Beautiful Mind”. Now that I have a more concrete plan the brainstorming has ceased a bit, but I was obsessed with figuring how I was going to get out of the mess of needing to rely on a decent paying job which I hated…and I needed that obsession to propel me to where… Read more »

Beth
Beth
6 years ago
Reply to  lmoot

You raise an interesting point about religion/spirituality (or lack thereof?) in how it informs our decisions. I wonder if believing in certain types of afterlife such as reincarnation and resurrection takes the pressure off trying to do it all and have it all?

Vanessa
Vanessa
6 years ago
Reply to  Beth

“I wonder if believing in certain types of afterlife such as reincarnation and resurrection takes the pressure off trying to do it all and have it all?” Have there ever been any studies exploring that topic? I think it would be fascinating. I was raised in a religion where resurrection was a major part of the doctrine. And since there was another life to look forward to, striving for any type of success in this one was viewed as being in direct opposition to worshipping god. “You can’t slave for god and for riches,” they would say. My mother was/is… Read more »

lmoot
lmoot
6 years ago
Reply to  Beth

I definitely think whether or not someone believes in an afterlife or reincarnation will affect how they live their life. For me I know it’s the main reason why I decided not to have kids. I simply cannot fit full-time child rearing into my life. When people find out they ask if I don’t like children, but that’s not the case at all. If humans lived to be 200 then I would love to have or adopt kids…at the youthful age of 70. However I have plenty of opportunites to play important roles in childrens’ lives through the children in… Read more »

Justin @ Decisive Dollar
Justin @ Decisive Dollar
6 years ago

Excellent write-up, thanks for sharing!

My favorite 3 words are “Ignore the news.” In my opinion, this cannot be understated. We all know that the media will exaggerate almost anything in exchange for your attention. I regret the number of hours I wasted watching scripted debates on CNBC.

Now, I do my best to stick to the fundamentals and ignore the pundits.

Collin
Collin
6 years ago

I really like this, and have been sharing with my relatively close-aged friends (I’m 27). One thing though – I’ve seen it on other PF blogs and I think here as well that it’s better to buy a more expensive house close to your work, than cheaper farther, because the commute will for many people winding up breaking the savings of a cheaper house.

Here, however, you espouse the cheaper home. I’m curious as to your thoughts on these two differing viewpoints, especially towards a younger potential homebuyer. Thank you.

Megan
Megan
6 years ago

I can’t thank you enough for this post. I recently discovered the GRS website and have really enjoyed reading a lot of the articles as well as the helpful (and sometimes not-so-helpful) comments after the blogs. This one in particular resonated with me in a way that nothing else on this website so far has. I actually read it twice and sent it to my husband. It seems so simple when you spell it out on my screen, but I really needed to see it in this format to get through my skull. In a way, we have been saying… Read more »

Byron Tully
Byron Tully
6 years ago

You might want to read The Old Money Book. It reveals some time-tested principles and practices of America’s upper class.

Hank-the-Tank
Hank-the-Tank
5 years ago

For me, financial independence has nothing to do with retirement. Financial freedom to me means not having to work. It does not mean being free from work. Rather, it is being free to work or not work as you deem fit. It means being able to change jobs when it suits you. It means being able to follow your principles and not compromise your ideals. The emphasis is not on “financial” but on “freedom.” It is better to have financial freedom now than in the future, sooner rather than later. This is because the earlier you get accustomed to sacrificing… Read more »

Nicole
Nicole
5 years ago

Do you consider someone financially independent if they are still relying on dividend income or only if they have a large enough nest egg (theoretically in a savings account) to support themselves for the rest of their lives?

DP @ Someday Extraordinary
DP @ Someday Extraordinary
4 years ago

Great summary. I read so many blog posts about this stuff that you can forget that it comes down to simple tasks and life decisions. Nice to see it all summarized in one write up without having to dig through archives to gain the same advice. The location that you choose to live is always a tough one. While everyone has a choice, I think a lot of it is circumstantial. If I happened to grow up in a high living expense area – maybe the Bay Area of California – I think it would be difficult to move on… Read more »

Pamela Lipscomb
Pamela Lipscomb
4 years ago

These are some great tips for becoming financially independent. I think one of the most powerful steps is to avoid debt. It takes self-control to not purchase something you can’t afford. Too often we shop emotionally. I always ask myself, “do you really need this or do you just want it?”
It saves me a lot of money and heartache.

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