I define Financial Independence as the ability to support your lifestyle (daily cost of living) through the income from your investments.

This means you have the ultimate freedom (beyond the time it takes to tend to your investments) to do whatever you want – i.e. more time with family, travel, read, binge watch all 9 seasons of The Office for the 3rd time like I recently did, or work at a job that you enjoy because you want to, not because you have to.

This seems like an impossibility to most people grinding it out at 9-5 that they hate just to get by, but it’s not as far-fetched as you might think.

Here are the major contributing factors to becoming financially independent:

1. Lower your cost of living – There is no more freeing feeling than knowing that you can survive (pretty comfortably) on very little spending each month. When I figured out how much I don’t really need and got comfortable with the idea that if all my “stuff” were gone tomorrow I would be ok, I felt like I had somehow beat the system.
2. Buy things that go up in value (and pay you regularly) – Debt on consumer products does the opposite of this – a TV goes down in value and you pay regularly in electricity to keep it on. However, purchasing a good rental property will pay you a small monthly payment while the property climbs in value each day you hold it.
3. Don’t quit your day job (yet) – Use as much of the cash from your day job as you can to buy more of contributing factor # 2. It will also give you the power to borrow more money to buy more of the above.  The more things you own that go up in value (assets) the quicker you get to financial independence, so use your job as fuel for that endeavor.

If you can start to tweak all three of these categories so that they are as optimized as possible (ie you are doing a lot more smart financial things, and a lot less dumb financial things) then it’s surprising how quickly you start to make major strides toward freedom.

In the following blog articles I’m going to go into greater depth on each of these three categories based on my experience working toward financial independence over the past several years.

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