How to Achieve Financial Independence

Without financial independence, people often feel trapped -- working jobs they don’t enjoy, delaying major decisions, or living with constant stress about money. Achieving financial independence provides peace of mind and freedom of choice.

Sounds like a first-person narrative there.

Of course, a LOT depends on where you live. Here in Idaho, life went on pretty much as normal. In the end, our results (cases, hospitalizations, ICU occupancy, deaths, et) were the same as the most draconian states. Customer traffic declined because people were scared and some of our favorite restaurants closed for good. But it wasn’t the heavy hand of state government. It WAS the heavy hand of the federal government causing fear.

I had financial independence when I was deep in debt. I found work that I loved to do even if I was not getting paid.

I found that I could keep reinventing my work by focusing on skills and abilities in areas that I liked. When you make work fun, challenging, and exciting, you are free and independent.

Further, having a net worth of millions doesn’t make one independent. The person is still dependent on the assets they have acquired.

Invest in yourself first.

1. Live below your means no matter what it is.
2. Salt away at least 25% from as close to the first day as you possibly can
3. Tax avoidance is a crime, tax management is not. Tax terms have changed many times in my last 50 years, do the best you can with that.
4. Dividend investments, buy good ones early, accumulate, manage, don’t necessarily hold all of them, Mixed ETF is probably the easiest way now.
5. Teach your children to work, pray they are smart, encourage and help them but don’t carry them.

If you like rentals fine. I have had them and hated them.

Balanced portfolios are just OK. They are a compromise that perform the same way, mediocre. They will probably have to be harvested instead of producing and they probably won’t leave a legacy if that is your thing. I don’t like them.

“The weak part of this article is advocating rental property.”

I agree 100%, particularly in tenant-friendly Blue States, where evicting a problem tenant can take months if not years. Several Blue States have “good cause” eviction laws, which prohibit owners from evicting residential tenants or refusing to renew their leases except for good cause, which is often a very high standard even for deadbeat tenants who claim financial hardship. In addition, some Blue States (i.e., NY) limit the owner’s ability to raise rents to reflect increased operating and maintenance costs, tax increases, supply and demand, etc., if the local municipality determines that the residential vacancy rate is less than 3%.

Commercial tenants present risks as well. Tenant bankruptcies can tie up the property for years. I’m aware of situations where tenants have vacated the property in the middle of the night leaving the owner with thousands of dollars in clean-up costs. Solid locations often turn bad and leave properties vacant for months if not years.

No thanks. In my opinion, the best investments are a well-diversified portfolio consisting of equity, income, and cash (I prefer exchange traded funds), with a solid history of growth and income.

In my experience, the best way to build a portfolio is to pay yourself first by maxing out on tax deferred retirement funds, IRAs, etc. “Dollar cost average” by setting up an automatic investment plan directly from your paycheck or bank account and invest the same amount weekly, bi-weekly, or monthly, into three to five exchange traded funds that meet your investment goals. (This results in the purchase of more shares when prices are low and fewer shares when prices are high.)

Also, except for a primary residence, don’t buy anything unless you can pay cash - including motor vehicles and vacations.

Also, except for a primary residence, don’t buy anything unless you can pay cash - including motor vehicles and vacations.

I would add one caveat here. Buying any asset through financing is OK under the following conditions:

1. The interest rate is no more than 2 points above the prevailing rates on 10-year to 30-year U.S. Treasury rates.

2. You have sufficient liquid investments to pay off the loan within five business days if necessary. In other words, you're financing the purchase as a cash flow strategy, not because you don't have the money to pay cash for it.

3A. The life cycle of the purchase exceeds the term of the loan.

3B. For the purchase of an item that depreciates over time (e.g., a motor vehicle), you intend to keep it for longer than you're paying it off.

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