Our Path to Financial Independence

Why Financial Independence?

Before we go all into what my path to financial independence looks like, I should remind you of why I’m pursuing it in the first place. The best place to go for the full story is my “about us” page, but you should also check out “Passion Fire” for an in-depth look at why I’m trying to build this kind of life (and why you should too!).

But, the gist of it is that I am on a path to financial independence because I want to live life on my own terms. I don’t want to be tied to any job or employer. I don’t want the stress of needing a job. Being stressed out at work sucks, and I don’t want to deal with that anymore.

How Do I Get to Financial Independence?

If you recall from our article on the Fire Fundamentals (and you can read it here if you don’t!) I mentioned that there are four steps to getting on a path to fire. Step 1 is learning about Fire – I think I have that covered. Step 2 is deciding what you will be comfortable with. The third step is to make a plan for getting there, and the final step is to execute that plan.

How Much Money Do I Need for Financial Independence?

Deciding how much money you are going to need in early retirement is as simple as figuring out what you want to do when you are finally free. I’ve thought extremely hard about this decision, and you should too.

I know I want to travel, so lean fire probably isn’t for me. But I also want to have a comfortable, secure traditional retirement (I absolutely don’t want to be in poverty when I am a senior!), so Coast fire is a must. I want to be financially independent as soon as possible, but will probably need about 60K per year when I’m older to be comfortable. I’d be happy to work odds and ends types of jobs, so I’d be totally comfortable with a barista fire type of lifestyle, but I think I’d prefer to pursue my newly coined passion fire. 

If that was a lot of Fire types to take in, don’t worry – it can be confusing at first. Read this post on the different types of financial independence for a better idea of what might be right for you. 

How to Get There?

Sixty thousand dollars per year without working a full-time job seems pretty daunting. I need big gains and passive income! My first big gain came from selling my house in Los Angeles, and moving to a lower cost of living state.

I got super lucky with real estate – and by getting lucky I mean I bought at a great time in a market that would only increase, and sold it near the top of the market. But that also meant I couldn’t stay in the crazy expensive metropolis of Los Angeles. I needed to find a new city in order to really capitalize on those real estate gains.    

Executing the Plan

The first step to executing the plan was selling the house in a high COL area and moving to a low COL area. Done!  I packed up and moved from Los Angeles, CA to Savannah GA (and then to rural Pennsylvania, which is even cheaper! Georarbitrage for the win!). Next, I used  my new found capital to set up diversified investments and open an account with Vanguard. Third, I dedicated myself to working like crazy for these next three years to shore up my investments and ensure that I are 100% ready to take that plunge into early retirement.

Passive Income

You can’t put all of your eggs into one (or even two!) baskets though. Passive income is the real key, so I needed to figure out a way to generate income without working a traditional job. There are so many options for this, some of which I’m dabbling in now, and some that I’m interested in exploring later. The goal is to eventually make money blogging (I made 16 bucks my first year, so I’m getting there). There are tons of other creative pursuits that I’m going to explore as well. I’m going to design t-shirts, write an e-book, create art, make jewelry to sell on Etsy, and that’s just the beginning. There are so many options for creating income outside of a normal job. It may not be the traditional definition of financial independence, but it will give you the opportunity to live life on your own terms.

In addition to that, I also have my 401K account for additional income when I reach retirement age, a pension, a Real Estate Investment Trust (REIT), and a few individual stock holdings. These different types of holdings should ensure that I am well diversified and should provide dividend income when I’m ready to stop working.

Not Your Plan

I know that not everyone owns a home in a high coast of living area. In addition,  not all those who do will make huge gains by selling.  Some people may even want to stay in their high cost of living areas. I know I did, I miss LA all the time.

But that’s why my path to financial independence isn’t exactly the same as your path. Don’t worry, there are tons of other ways! Check out this small list of personal finance bloggers to see their paths to fire. You can take what you like from each and start your own journey:

Other Paths to Fire

 Downsize your 2080’s  Path to Independence involves downsizing the amount of time spent working. Some paths are simply about finding that work/life balance! Check out how they do it here!

Fifty Week Vacation is investing in both the stock market and real estate to create short, medium and long-term cash to achieve FIRE. Read about their investment journey here!

Saving Sherpa is perusing FIRE by putting experience over luxury, not having kids, and saving 70% of his income w/o side hustles. Read more about his $26k/yr Boston lifestyle here!

Military Dollar is going to achieve Fire by taking advantage of the programs offered to members of the armed services. She’s creating multiple streams of retirement income. Follow her journey and learn some additional awesome finance tips for service members here!

Tread Lightly Retire Early is going to reach Fire by living an eco-friendly life. She’s cutting spending to maximize their savings rate while minimizing their carbon footprint. Find out how they help the planet while gaining independence here!

What’s Your Path to Financial Independence?

As you can see, there are lots of different ways to get to financial freedom. There isn’t a one size fits all approach. And these blogs I listed are just a small sample of the paths different folks are taking, there are thousands more out there. Hopefully you will get some ideas from these and other blogs about what will work for you.

What does your path to Fire include? Do any of these bloggers resonate with you?  Is there a totally different path that I’m missing?  Let me know in the comments!