How I Plan to Reach Financial Independence

Lately I’ve been hearing about some terrific plans that others have made for early retirement and financial independence. Even though I’m still fairly young, I don’t think it’s a bad thing to be dreaming of the days where we are no longer beholden to the chains of a 9-5 job. If anything, thinking about the future gives me extra motivation to save!

I thought I would share the details for how I plan to reach financial independence, as this goes hand in hand with early retirement for me. I’d like to go the non-traditional route, where I reach financial independence, still work, but not depend on the income.

Having the freedom to do what I like, when I like, is very important. There are so many hobbies I’d love to explore that I don’t have the time for right now, and I wouldn’t want a miserable job to get in the way of that. If I make money doing what I love, great. If not, still great! I want to be in control of how I spend my time. After all, we only have so much left.

Step one: get out of debt

Financial independence - more time to hike?

Obviously, I need to pay off my student loans before any of this can remotely become a reality. I have been working hard at this all last year, and I am really hoping to be able to pay off these loans early next year. I don’t have a specific date because as frequent readers know, so many things are still up in the air for this year.

I’ve already made a few extra payments this month, and I’m planning on putting most (if not all) of my tax return toward my smaller loan. It’s getting close to the $3k balance, and if I could have that one loan paid off by the middle of this year, I’ll be thrilled! Then I can proceed to roll over the extra payments I was making on that loan to my bigger loan. Exciting!

Step two: move and reduce expenses

You all know that I’m planning on moving to lower expenses, mainly rent. The main goal of this is to accelerate payments to my student loans (anything I manage to cut goes toward it), and after those are paid off, to accelerate saving.

R is pretty much going to follow the same path as I am. The only reason I’m centering this more around myself, is because he doesn’t seem very enchanted with the idea of early retirement (yet). He thinks he would get bored and doesn’t mind working longer than I plan to.

We are willing to continue living frugally in the spirit of getting these nasty loans taken care of. There will be no lifestyle inflation until that occurs, and even then, there’s not much more that I can think of that we truly need. Ideally, once the loans are done, I’d continue saving the amount I was putting toward them.

Step three: advance in careers

The ideal scenario: we move, R receives a promotion, gets more bonuses, and in a year, possibly gets promoted again. R was hired on as a manager trainee, and the company encourages employees to move up the ladder.

R has an amazing work ethic, and I’ve always admired that about him. He worked at a grocery store for 4 years (during college and after), in hopes of getting into a full-time management position there. They were taking too long and making empty promises, so he left. I have no doubt he would make great management material, and he is willing to take on the long hours for the big bucks.

We’re hoping this will allow us to essentially live off of his income alone, saving mine and maybe part of his. This probably won’t be a reality for another three or five years, but we can dream, right?

Financial independence means peace

In case you’re wondering about me – I’m still undecided as to what I want out of a career. I’d love for a law enforcement opportunity to crop up for me in our future destination, but if not, I want to try freelancing or making income online. I wouldn’t turn down a regular full-time job if the pay, location and people were right. It just depends on how things turn out. I would feel much more comfortable giving freelancing a go once we could live comfortably on R’s salary.

Step four: create multiple income streams

I would really like to get into rental properties, and R has interest in remodeling a home. While both are very far-fetched right now, they could be future possibilities.

Investing is the other choice avenue, specifically dividend investing. I’m still new to all these ideas, but I’ve heard great things about putting your money to work for you, and fully plan on doing that.

I would also like for R and I to develop a side hustle that we can do together, like flipping furniture. My dad has all the tools, it’s just a matter of having the space and time for it. Working on the blog gets lonely sometimes. R is a horrendous writer (his words), so I doubt he will ever have interest in it.

Step five: save aggressively for retirement

I am happy to say I finally opened an IRA this month. I knew I would regret it a lot if I didn’t start “early.” Time really is on my side, and I need to use that to my advantage. Sadly, I’ve never worked at a place that offered a 401k, so I am technically starting a bit late.

R has a 401k with his company. While he doesn’t like seeing the money being taken out of his paycheck, I’ve managed to convince him it’s for the best. Even though it can’t help him out right this second, it will be there in the future, so it’s not going to waste, as he likes to put it. 

Being able to live off of one income would be huge for this goal. I admire those that can put one salary toward savings goals. Any extra side income would go straight to this as well.

Step six: relax and enjoy

I don’t have any “set in stone” plans for early retirement, nor do I have any numbers. I have no idea where or when R and I will end up settling down, and we probably won’t be buying a house until then. Considering he currently plans on working until 45ish, I’m perfectly fine being able to pursue my own interests while he does that.

We both have dreams of traveling around, and while I would like to go sooner than later, hopefully he’ll have acquired a decent amount of vacation time in 10-15 years for us to be able to take some nice trips.

That’s about it in a nutshell! Pay off debt, save, find a career path, save some more, create several income streams, live off of one salary, put more toward savings, and then enjoy the efforts we made early on.

Do you have any plans to retire early or become financially independent? What steps are you taking to get there? If neither of these interest you, are you taking a traditional path to retirement?



  1. Alicia @ Financial Diffraction February 19, 2014 at 8:00 AM

    Sounds great. I’m right there with you! I am working on step 1, but oddly, I already have started with Step 4 and two streams of income (I own a rental property – bizarre, I know).

    I don’t want to have “early retirement” in the sense that some have it – I am in the “financial independence camp” and I could say FU if I wanted to. Being able to walk from a bad situation sounds amazing to me. :)

    1. E.M. February 19, 2014 at 9:33 PM

      That’s great that you already have a rental property! Honestly, a rental might come before we buy our own house, depending on whether or not we’re ready to settle down in five or so years. FU money is the best!

  2. Brian @ Luke1428 February 19, 2014 at 8:01 AM

    I think you nailed it here with the steps E.M. The earlier one gets started with this process the better likelihood they will have of becoming financially independent. It’s is more of a challenge though when you don’t exactly know how your career will progress. Uncertainty blows holes in even our best laid plans. :(

    1. E.M. February 19, 2014 at 9:32 PM

      Ain’t that the truth! R should have been promoted already by our optimistic expectations, but it’s not as if we are suffering here. We just need patience and the ability to accept things as they come and adapt. There will be ups and downs but at least we have about fifteen years for it to work out!

  3. Michelle February 19, 2014 at 8:50 AM

    I would like to reach financial independence sometime in my 30s. The thing that we really need to work on right now is creating multiple streams of income (mainly passive income).

    1. E.M. February 19, 2014 at 9:30 PM

      I think you’re on a great path to getting there! You’ve already accomplished so much with paying off your student loans and switching to self-employment. I would like to create some passive income streams down the road as well.

  4. Jamie V February 19, 2014 at 9:24 AM

    I’d love to be financially independent sooner rather than later and am working towards that. My boyfriend sounds similar to R. It took time to convince him the 401K was a good idea, but now that it’s been 5 years, he is very excited that he hit a good milestone for it, which really helps my case out! I also want to be able to travel to my hearts content without having to worry about money or a job. The next difficult part is convincing him that all this savings can lead to actual freedom because I don’t think he can see the grand picture. But, we’ve got a good start and I think once I start investing (I’m thinking Vanguard) and he can literally see my contributed money and the income generated (despite it being a small amount at the start) by it, we will get one step closer. Patience is the key, now, which I think will truly be the hardest part on this all – the waiting!

    1. E.M. February 19, 2014 at 9:28 PM

      I opened my IRA with Vanguard. I’ve heard so many good things about them, and it was really easy to set up. I’m looking forward to investing with them once my student loans are paid off. Sadly, R still isn’t very happy about the 401k, even though it’s grown a bit the last year. Hopefully 5 years makes a noticeable difference! Perhaps you could show your boyfriend some compounding interest charts? There’s a lot of great examples around, even though it’s hard to visualize that you personally can get there.

  5. SavvyFinancialLatina February 19, 2014 at 9:46 AM

    We want to be financially independent. Being stuck in the miserable grind is not our definition of happiness. I’m setting goals to get us there. Work hard in our 20s to build a solid financial base.

    1. E.M. February 19, 2014 at 9:26 PM

      I agree. My boyfriend doesn’t really view his job like that (right now), but I definitely don’t want to be stuck at a desk job for the next forty years. It can be difficult to make so many sacrifices in your twenties, when everyone else out there is living it up, but I’m sure it will be worth it!

  6. February 19, 2014 at 10:54 AM

    I’m glad you mentioned careers as people neglect that your career will be responsible for building 90% of your wealth. I thankfully have a pension so if I can last 19 more years than I’m good

    1. E.M. February 19, 2014 at 9:25 PM

      Career progression is really important to us, especially as we still have pretty low salaries being only two and three years out of college. Pensions are great to have!

  7. Andrew@LivingRichCheaply February 19, 2014 at 1:06 PM

    Sounds like a great plan. Congrats on opening the IRA. I’d definitely like to retire early or become financially independent but I don’t think we’re planning moving to a lower cost of living area. Although I will have a pension at my job so the latest I’d retire would be 55-56 years old. I’m hoping it can be earlier, but I’m not sure I can give up on the pension benefits…that’s why they call them golden handcuffs I guess.

    1. E.M. February 19, 2014 at 9:23 PM

      My mom really got away with a nice package after being vested with the state. She was finally at her 10 years, and honestly, it helped make their move easier. She got an amazing payout from all her unused time, and her pension adds a nice little bonus on top of my dad’s social security. What matters is enjoying your job, though. My mom was basically working FOR the benefits, which isn’t a good thing.

  8. Broke Millennial February 19, 2014 at 1:21 PM

    “Any goal with out a plan is simply a wish.” Looks like financial independence is no longer a wish for you! These action items look well thought out and, more importantly, achievable. I’m like you and don’t seen FI as completely separation from work, but simply a way that I can only take on work I enjoy and don’t feel chained to a desk and salary. Good luck on your journey!

    1. E.M. February 19, 2014 at 9:20 PM

      Exactly. I haven’t yet found an amazing job that I thoroughly enjoy, but if I do, that’s fine, too. I just want to have the choice, in case life gets in the way! Working simply for a paycheck is soul draining.

  9. Ryan @ Impersonal Finance February 19, 2014 at 1:21 PM

    Awesome steps- I think you nailed it on the head in terms of what you’ve got to do. I’ve actually been giving a lot more thought to early retirement or financial independence. I think if I really went for it, I could be retired comfortably in about 10 years. But, part of me doesn’t want to be simply comfortable, part of me really wants to be financially independent, so my “salary” is basically just disposable income that I can use to fund my wildest dreams. Of course, I know that isn’t always smart. It’s a battle raging within my head right now. And congrats on the IRA. It’s a small step, but it’s a big one.

    1. E.M. February 19, 2014 at 9:15 PM

      There are endless possibilities with financial independence, it can be a bit overwhelming. I would love to travel, but I want to make sure it would balance out with our normal living expenses, so I don’t go through the funds too quickly. 10 years is great, though! I’m sure as you keep thinking about it and stumbling across the experiences that others have had, you’ll figure it out.

  10. Done by Forty February 19, 2014 at 3:21 PM

    We’re trying to follow almost the exact plan you’re laying out, EM. Debt repayment was first along with focus on getting raises/promotions. Then we started investing aggressively, and we hope to get some “passive” income in rentals soon.

    Still, you’re starting this sort of planning way earlier than I did. Good on you!

    1. E.M. February 19, 2014 at 9:14 PM

      I’m glad I’ll be following in your footsteps, then! Technically you’re still quite ahead, having a house paid off and all =). I would be happy to be in the position you’re in in another ten years or so.

  11. anna February 19, 2014 at 3:53 PM

    Great strategies, EM! I think you have what it takes to accomplish this goals considering you’re still so young! We’d like to be able to just live on one income, too, and have my income for investing. I’m not sure if we’re in the early retirement category if we stay in SD, but we’d like an earlier retirement.

    1. E.M. February 19, 2014 at 9:12 PM

      I feel like anything around 45-50 is early nowadays. There are many 60+ individuals finding they need to at least have a part-time job. However, most of those that I know don’t/didn’t have saving for retirement on their mind! Living off of one income is still a great accomplishment, especially in expensive areas.

  12. lyle @ the Joy of Simple February 19, 2014 at 4:23 PM

    Hey EM and great ideas for the long haul!!

    I retired at 32 when I was laid off 20 some years ago and haven’t looked back since. But what worked for me, probably would not be of interest to any sane individual :)

    That being said, keeping your eye on the prize should be do-able in this instance. Much luck towards your success :)

    Take care and all the best.


    1. E.M. February 19, 2014 at 9:10 PM

      Thanks Lyle! My dad getting laid off and being unable to find work again heavily influenced my parents’ decision to sell their house and retire. Sometimes it’s good timing, even if it doesn’t seem like a good thing as it’s happening!

      1. lyle @ the Joy of Simple February 19, 2014 at 11:27 PM

        Exactly…although it is hard to see the positive aspects at first!

        Take care and all the best.


  13. Tonya@Budget and the Beach February 19, 2014 at 5:57 PM

    Sounds like a plan! I do not plan that far ahead. I think I’ve lived enough life to know that planning too far out is a waste of time FOR ME because life changes on a dime. I try to go no further out than one year (and truthfully in some ways that’s too far out) and break them up into monthly, manageable goals. But even more direct are the daily choices I make. Those are what lead up to the big picture in the long run.

    1. E.M. February 19, 2014 at 9:08 PM

      Not much is certain in life, that’s for sure. I do plan and think ahead a lot, but most of the time, things do change, and that’s okay. We adapt, and as long as we keep the bigger picture in mind, our daily choices do have a big influence!

  14. Ashley February 19, 2014 at 9:14 PM

    Great strategy! I totally agree with wanting to live in a lower cost of living area… after experiencing Rochester I never want to go somewhere expensive again! BUUUUT Mike wants to go back to DC next year and I am dreading that insane rent again.. BOO.

    I was originally set on early retirement… until the entrepreneurship bug bit :) I love working towards a goal so it is great that you’re planning things out like this now! You are definitely on a good path towards achieving these goals :)

    1. E.M. February 20, 2014 at 10:26 PM

      Aww. Maybe he’ll get the itch to move again after a year? Haha. We think we’ll be doing some bouncing around for the next few years, but I’m hoping they will mostly be inexpensive places. We’re both pretty fed up with prices here.

      Keeping an open mind as to what might happen is key. I’m not opposed to letting life take its course, leading me where it will, whether that means working for myself or someone else.

  15. Our Fine Adventure February 19, 2014 at 9:15 PM

    Good strategy!! Sometimes it seems so simple… pay off debt, and earn more than you spend, saving the rest… but that is the way to do it :)

    We are kind of in stages 2-5 right now… always trying to reduce expenses anyway we can, advance at work, build multiple streams of income, and save aggressively (for retirement and other goals)… once you get step one taken care of, step 6 becomes more and more like a goal that will eventually be met rather than the far off notion that it can sometimes seem!

    1. E.M. February 20, 2014 at 10:24 PM

      Yes! They’re all little building blocks to the ultimate goal. I think everything after step 1 is the exciting part. I can’t wait to place more of a focus on my career and making more money. Hopefully things will fall into place after that.

  16. KK @ Student Debt Survivor February 19, 2014 at 10:49 PM

    I’m definitely hoping for financial independence through either self-employment and/or a variety of income streams. I’ve always wanted to work for myself in some capacity and I also have a strong interest in building a real estate portfolio of rental properties. I’m thinking our next step might be moving out of our condo and into a multi-family in the suburbs so we can get some rental income working in our favor.

    1. E.M. February 20, 2014 at 10:21 PM

      I think moving and renting out your old place is probably the “easier” path of getting started with rental income. It seems like a decent gateway for most people, at least! You also don’t have to deal with the potential hassle of selling.

  17. Dear Debt February 20, 2014 at 1:25 AM

    I love this! Very easy and nicely laid out. I want to follow those same steps so I can do what I want, and travel! I have an IRA, but with only $1500. I’ve only worked at nonprofits and because they didn’t offer a match, I didn’t see the use. I feel late, but getting started is the best part.

    1. E.M. February 20, 2014 at 10:19 PM

      I am right there with you. I put $1,000 in as it was the minimum, but it is certainly better than nothing!

  18. DC @ Young Adult Money February 20, 2014 at 7:53 AM

    Great plan! While I certainly hope to advance in my career, at this point I am mainly focused on increasing side income and creating new income streams. The way I see it is there is only so much I can do at my 9-5 in a given day/week/year to move up but side income can be immediate and can immediately help with my debt pay-down and allow me to invest at a faster rate.

    1. E.M. February 20, 2014 at 10:17 PM

      It does depend on the structure of your job and company, I guess. Plus if you’re older and more established, there might not be much room for advancement. In any case, it’s all about making more money! As long as you’re advancing in some aspect of your life, that’s a win.

  19. jefferson @See Debt Run February 20, 2014 at 9:22 AM

    Lots of great advice here… I have already crossed off a few items on that list and have been focusing on that “multiple streams” item.. My time is limited, but I do have hopes that all of the work spent developing side income will eventually pay off.

    1. E.M. February 20, 2014 at 10:15 PM

      I think you’re on the right path with the blog(s)! If I could get $2,000 a month eventually from mine, I’d be thrilled. I’m sure it will all pay off in the end.

  20. Connie @ Savvy With Saving February 20, 2014 at 10:11 AM

    Such a great plan and great advice! I have the same goals as you and the hardest part is getting on the right path. I feel like once steps 1,2,3 are down, 4,5,6 will come much easier.

    1. E.M. February 20, 2014 at 10:14 PM

      The hardest part right now is paying off my student loans. I feel “stuck”, like it’s going to take me years, but it gives me more motivation! For some reason, saving comes more naturally, so I can’t wait to get there.

    1. E.M. February 20, 2014 at 10:12 PM

      It is the best one!

  21. Cashville Skyline February 20, 2014 at 3:01 PM

    Definitely a solid plan! I’m currently on the “generate passive streams of income” phase of my quest for financial independence. Without a 401(k), I’m aggressively saving in my taxable account and maxing out my Roth IRA. Boosting my income needs to happen next.

    1. E.M. February 20, 2014 at 10:12 PM

      Nice work! Maxing out my Roth IRA is definitely on my list after I get my student loans paid off. I’m sure it feels great to be able to do that.

  22. SarahN February 20, 2014 at 8:06 PM

    I’m not as into early retirement – I struggle to fill my holiday time with fun things, without getting bored (or burning through money – what am I talking about, I don’t actually burn lots of money, but I know if I could I would etc).

    I continue to build my stockpile – ie I have a rental income, which more or less pays my mortgage, but I also continue to pay my mortgage too, essentially getting ahead, then I also have a very healthy retirement fund (they are different here, anyhow), and I have shares, I try to buy $2k worth a year, and reinvest any dividends in more shares, so they slowly grow. With the mortgage, I have enough in the offset account (ie able to access as cash) that I could say FU to most situations, and sustain myself for 6-10months, and longer if I was willing to sell the property. That concept makes me feel good. It also gives me the flexibility to pull some of it out to travel, rather than lock down to a quick mortgage payout.

    In my opinion, it’s better to travel a little, regularly (once ‘bad’ debt is paid) than wait and do it all when I’m ‘older’ and possibly less able to do (illnesses, injuries, aging parents, children). That being said, I don’t have the constraints of minimal holiday time in the US, we get four weeks here, and I always seem to have more leave than I take holidays?!

    Good work on starting on the retirement fund – every bit counts, and as you know, starting early will help!

    1. E.M. February 20, 2014 at 10:11 PM

      Having the rental income cover your mortgage and paying extra on top of that is great! It sounds like you’re well on your way to having everything ready to go when the time comes.

      I wouldn’t mind traveling around a bit if our vacation time eventually does increase. My mom managed to work her way up to four or five weeks a year, but the standard is one to two. I’m afraid I would feel a bit rushed with a one week timeline, plus if we only get one week a year, it makes it difficult to choose where to go and what to do with the time.

  23. NZ Muse February 20, 2014 at 9:11 PM

    I’m not really into early retirement but definitely admire those who are. I like my work (which is lucky since it’s never going to make me rich). I have pretty modest goals – live a comfortable life and buy a house – though it’s tough in an expensive country like NZ.

    1. E.M. February 20, 2014 at 10:07 PM

      More power to you! I am secretly a bit hopeful that I’ll find a nice job that I don’t mind working at. Having modest goals does help, especially when living in an expensive area.

  24. Pauline February 20, 2014 at 10:44 PM

    Sounds like a solid plan! I tried to share a common side hustle with my other half but we are way too different in the way we do things to make it work. I like the idea though.

    1. E.M. February 21, 2014 at 10:31 PM

      I just dislike how much time blogging can take away from spending time together. If we could make a joint effort, I think it would be more fun, but we’ll see!

  25. Lisa E. @ Lisa Vs. The Loans February 28, 2014 at 12:29 AM

    I think furniture flipping sounds fun! What a great way for the both of you to earn money and spend time together! As for me, I’d love to reach financial independence, too. I’m just not entirely sure when…

    1. E.M. February 28, 2014 at 11:11 AM

      I would be really happy if it happened within the next five to ten years, as long as it’s before I’m forty! It’s hard to determine when we aren’t really settled in a career or even an area.

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  27. Adam March 28, 2014 at 6:30 PM

    I am there with you on those steps, currently focused on getting out of debt, creating multiple streams of income (although just trying to get started) and especially reducing my expenses.

    1. E.M. March 30, 2014 at 7:55 AM

      Getting started is better than nothing! It can be difficult, but there are so many good ideas out there from other bloggers on the income streams they’ve had success with.


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