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Home » Personal Motivation

Two Paths to Financial Independence. Which will you Take?

Last updated by on January 10, 2015

It’s easy to put off saving for retirement until mid-life, take out a 30-year mortgage on a big home, watch cable TV to pass time, rely on student loans instead of working to pay off tuition, get the latest and greatest smart phone with unlimited data, drive to work from the suburbs, go out for lunch every day, and save a small fraction of your total income. There are conveniences at every step in life.

But, instead, what if you…

…maxed out your 401K every year from age 25 through 40 so that you could stop contributing and worrying about how long you could support yourself later in life?

It can be done, but it’s not easy.

…ditched the unlimited data plan and saved $65 a month and $700 a year by switching to prepaid plan like Tracfone for less than $7 a month? Or, went with no cell phone at all <gasp>.

It can be done, but it’s not easy.

…saved over $1,000 per year by getting rid of cable and using that time to connect more with family, friends, neighbors?

It can be done, but it’s not easy.

…paid for your house with cash so that you didn’t have to spend more on the mortgage over the life of the loan than you did on the actual house itself?

It can be done, but it’s not easy.

…saved hundreds per month by bringing your lunch to work instead of going out?

It can be done, but it’s not easy.

…moved closer to work and sold your car so that you could save hundreds per month and thousands per year by not paying for the car, maintenance, fuel, and insurance?

It can be done, but it’s not easy.

…paid for your education while you were getting it, instead of paying off student loan debt for the next 35 years?

It can be done, but it’s not easy.

…grew your own food so you weren’t held captive to price increases as fuel costs went up?

It can be done, but it’s not easy.

…saved 60% of your take home income versus the average U.S. savings rate of 5% so that you were saving as much in one year as most Americans do in 12 and could retire decades ahead of them?

It can be done, but it’s not easy.

It’s very easy to make justifications or excuses, to bend to peer pressures, to opt for luxuries, and to choose the more convenient alternative.

Consequently, there are two paths to a destination called “financial independence“.

One is common and expected – the tourist route, if you will. It’s long, flat, not very rewarding, and a few roadblocks could easily result in you never reaching your destination.

Another is off the beaten path. It’s steep and can be challenging. Some may call you crazy for even trying it. But there is reward in the challenge and it’s guaranteed to get you closer to your destination in a much shorter period of time.

Which path will you choose?

path to financial independence

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • I think I’m on the middle path right now…I have been doing some things that save money like I ditched cable months ago, making my own food (taking my lunch to work), and I’m working on fixing how I pay for college (took out a bunch of loans early on…but I have a plan to make those go away), but there are many things on the list I haven’t done yet…or can’t do yet.

    This is definitely something I am aspiring to!

  • I’m going to enjoy myself while I am still young. However, at the same time I going to try and be smart decisions and save a significant amount so that I can take the right path towards financial independence.

  • Leah says:

    I hate this kind of thinking. I am ABSOLUTELY on the path to financial independence. I save & invest consistently. I have no debt. I don’t have cable. I live close to work (but still have to drive in my UBER fuel-efficient car). I take my lunch most days to work.

    But by God I’m not denying myself every worldly pleasure and convenience to save 60% of my income for retirement, because a.) that doesn’t make me excited about being alive now and b.) I may not LIVE til retirement and refuse to put all stock of a joyful, abundant life in some uncertain, un-promised time.

    I’m taking a vacation to Costa Rica next week where I plan to stay in great hotels, do whatever adventure/relaxing I want, when I want, and, to eat, drink and dance with reckless abandon.

    I refuse to put off LIVING just to stockpile money in hopes of retiring a couple of years early.

    • G.E. Miller says:

      I don’t understand if you’re already doing all of these things why you ‘hate this line of thinking’? I never said deny yourself of every worldly pleasure, by any means. Life is full of tradeoffs.

      • Leah says:

        I mean to say that there are not 2 paths to financial independence but hundreds. It’s not a deny-and-win world or a pleasure-and-lose world.

        I hate these recycled thoughts around the personal finance sphere that say saving is the only way to financial independence. Sure, I don’t think anyone should spend money on crap that doesn’t bring them joy, but saving is NOT going to make everyone independently wealthy.

        Invest. Ask for a raise. Take up a side job. Sell your junk on ebay. Save some too.

        • Leah says:

          …and by “saving” here, I mean “saving money on cable/grocery shopping/driving to work/mortgages/eating out, etc.”

          • G.E. Miller says:

            I am giving examples of how one can approach different purchasing scenarios with a “savers mindset”. With each of the scenarios I listed, I don’t think the “hard” option is necessarily that sacrificial at all (all it does is prevent me from buying more ‘stuff’ that results in fleeting happiness at best) – and if it gets me to the end goal sooner, I’m willing to take the tradeoff. I still have guilty pleasures like you or anyone else, but having this overall mindset keeps me, and I’m sure many others on track.

            Income is a wildcard. Sometimes in our control, other times not. Choices around spending are more of a common denominator.

            Yes, there are ‘many’ different paths, but each of those paths are determined by the decisions we make. It’s not always black and white, but having a focus to default to is never a bad thing.

            And to your “recycled” comment – I just write about what’s on my mind and what I think others may be able to relate to/benefit from. I don’t steal ideas from my peers. Very offensive and negative comment.

          • Leah says:

            Well now I’m feeling all guilty and mean, which was not my goal. I apologize for the wording that offended you.

            I’m not saying that your advice is bad.

            My debate is that the personal finance blogosphere as a whole (not that you’re stealing ideas, they’re just ideas that are prevalent most everywhere) interprets saving money on life’s daily purchases as the one-way ticket to financial freedom.

            I know it to be true, however, that investing in the stock market or other interest-bearing financial instruments, and consistently earning your worth in the job market are long-term, exponential-growth habits that will get a 20-something closer to financial independence than growing your own food and not having a data plan on your cell phone.

            And you did approach the article with the overarching theme of “saving money on these life purchases is the road to achieve financial independence” not “how to approach these purchases with a saver’s mindset.”

            I, like you, don’t think that money will buy me *things* that will make me happy. But in the case of putting off something that will bring me joy (traveling to Costa Rica) because I “should” be saving 60% of my income for retirement–I’ll choose to spend now.

  • Ginger says:

    I’m in the middle path but working on getting closer to the “off the beaten path”. We only save 12.5% but are slowly moving it up as we gain more income, we are looking for more streams of income and keeping our expenses low. We have started a garden and are learning on our way, we mostly bring our lunches from home and go out to eat once a month. We are on a shared cell phone plan because it is cheaper than a pre-paid and a home phone. Over time our income will increase and out expenses will not, that difference will bring us the wealth we want.

  • Jamie says:

    Always enjoy your musings. This is a tough one because I tend to be the seize the day type when it comes to te little things I allow myself to enjoy on a daily basis. Cable, music and the occasional fantastic meal out. When it comes to maxing out the 401(k) and investing though I’m on it! I definitely think there’s room for a middle ground with these two example paths and, balance tends to be my goal. Besides, if I didn’t have my smartphone and data plan I couldn’t read your blog in bed right now 🙂

  • Chris says:

    I think this post is extremely thought provoking and G.E., correct me if I’m wrong, but what I got out of this was that we aren’t constrained to what the popular ways of handling money are. We don’t have to use cable, spend until we’re neck deep in debt, feel constrained by our student loans. We can if we want, though. The choice, ultimately, is ours.

    Your options for another path are just that, options. They happen to be the ones you’ve taken, but obviously everyone has different lives, different situations, and different experiences.

    I believe what this post does is make you think, which I believe is most important. Think about where you’re at, and think about what it is you want out of life. You want to retire at 40? You need to make a certain set of decisions. You want to live in the moment, then that’s an entirely different set of decisions. There is no blueprint to freedom, because everyone’s sense of freedom is different.

    My fear with a lot of personal finance posts today is that they are almost too prescriptive. Save 10 percent of your income. Max out your 401(k). Do this. Scratch that. Personal finance is portrayed as black and white, and I believe that many feel constrained to follow those paths … which is the complete antithesis of freedom.

    I believe this post is very valuable for the sake of provoking candid thoughts about our own financial goals and situations – I believe it would serve as a great follow up for your readership as to how to figure out what freedom means to each of us, and then how to chart a path that meets that specific, unique definition of freedom.

  • Julie says:

    It’s definitely about what you want out of life. For me, it’s important to enjoy my life now, but to feel financially secure for the rest of my life. Therefore, I have set amounts which go directly into savings/investments/401k and the rest of my money is for me to spend. I spend roughly a third of what I make. Most of my money is spent on nice restaurants, vacations, and shopping (mostly clothing, because I need clothes for work). I never bring lunch with me, so I spend a lot of money on that as well.

    I’ll obviously retire with less money in the bank than if I were a diligent saver. But for me, it’s totally worth it to enjoy my life now. My grandfather for example, is now just starting to spend his money, mostly to travel. And although he’s having fun, he has health problems which do interfere with some of what he would want to do. For me, it’s the opposite–I’ve seen so much of the world already (and plan to see a lot more in the next few decades) that when I’m 70 I’ll be quite content to sit on a beach and do nothing.

  • Ron Ablang says:

    Wow. I feel behind compared to all of you. I have a 1 year old child and we’re probably going to have 2 more. I’ve conceeded that we are not going to be financially rich, but I feel that we could be rich in other ways. My simple goal is to just pay off the house in 15 years (we refinanced into a 15-year loan).

    • Jamie says:

      Ron, don’t fret; you’re not behind. You have a family, which I aspire to have one day and you’ve already got your home. Money is only one piece of the puzzle and since you’re on this site it seems like your mind is in the right place. A lot of people’s children get to high school before they start thinking about paying for college, etc. So while it’s never too early to start thinking about minding your financial p’s and q’s, you’re hardly behind in the grand scheme of things.


  • Natalie says:

    Breaking out of the consumerist mindset is very important to our individual success. I’ve been spending a lot of time recently on Early Retirement Extreme lately (which I found through your link) and they recommend many of these techniques if you want to retire extremely early. I also highly recommend a video called “Money as Debt.” There is a Money as Debt II which is equally good. It explains very clearly how the current debt based economy works from the ground up.

    Watch it here:

    I’ve been running the numbers for my situation and found that saving more than 30% doesn’t make sense. You get diminishing returns. After 30% I only get one extra year for every 5% saved and it’s not worth it for me. This depends a lot on your income. Our household income is only $36k so maxing out our 401k isn’t even possible. (Max allowed is 35% of income.) We are currently saving 17% in 401k and more in other accounts.

    Also, I think the student debt picture has changed since they began income based repayment in 2009. You only pay what you can afford and the rest is discharged after 25 years. If you are planning on going into a low paying field, this can be a lifesaver. I took 10 years to finish my B.S. because I was working at least one full time job (and frequently two) to put myself through school. Had I been clairvoyant enough to see this coming, I would have not worked and finished in only 4, giving me a big head start on my career. Now, if I want a Ph.D (which I do). I will be about 40 by the time I start my career. Yikes!

  • Natalie says:

    Oh yeah, and the house thing. I heartily disagree that a mortgage is inherently bad, although many people make mistakes when it comes to this important life decision. Since you have to pay for a place to live, you should be questioning whether purchasing will reduce the cost of living. Although the market here is bizarre, it is currently possible to buy a house for $35k that will rent for $900 in my neighborhood. I wouldn’t rent if I could purchase, even if it meant agreeing to a mortgage.

    • Ginger says:

      I am the same way, Natalie. I plan to max out my 401k, Roth and some taxable savings before I ever start paying extra on my mortgage. It is only 4.75%, less than I would pay in rent and would not save me much in cash flow.

      • Roman says:


        This may be different depending on the mortgage, but I’m currently refinancing and crunched the amortization calender. I find out that paying an extra $100 to the mortgage cuts it by 3 years, but starts to diminish for every extra $100. Granted, this would be at the start of the loan, but this is convincing me to try to find $100 in my budget for it.

        • Ginger says:

          But what would you get by investing the $100/month in your Roth or 401k for 27 years? Would it be more than the saving of interest you would get by paying down the mortgage? No one has unlimited money so we need to choose what is more important. To me, cash flow and invest large amounts is more important than the small change in cash flow and interest saving I would get.

  • Sarah says:

    We save now.. actually, put 45% of our income on our house.. it`ll be paid off by the time we are 31! We are a bit out of the ordinary but my husband and I make a total of 150K and are only 25. Now.. we could take all this money and buy luxury cars, boats, ATVs and other toys.. but we choose to put it on our mortgage, into retirement funds, other investments. We plan on retiring as soon as possible.

    I think life is about choices. We like the mentality of work hard, play later.. and we still enjoy ourselves but we save SPECIFICALLY for those things. It`s like a reward for all our hard work.
    I think it`s okay to `live now` but its important to make sure we are paying ourselves first and not accumulating debt in the meantime. It`s fun to play to.. but within reason.

    That`s my 10 cents. hehe

  • Sarah H says:

    Of course we are… about 1000 a month.. about 300 of that goes towards my 401K at work.. Plus, my husband will retire with a 40-50G pension that will help with our retirement funds.

  • Omar says:

    Life is a journey with a beginning, a middle, and an end. We can only dictate the middle. You may save for a rainy day and pay off all of your creditors on time, and be a model citizen, but then life’s random variables will hit you. It’s usually something ridiculous that is out of our control.

    Something preposterous will prevent you from reap the product of your hard labor. Enjoy the freedom that you have and cherish the people around you. Ultimately, it will be these moments that we’ll take a pleasure in because there is no monetary incentive to be wealthy when you are six feet under.

    • G.E. Miller says:

      Omar, I definitely agree with you. However, I think it’s important to separate ‘hoarding wealth’ from being ‘financially independent’. I’m not a proponent of the former, but I am a big proponent of the latter. And aiming for the latter doesn’t need to get in the way of cherishing those around you in those middle years. If anything, the more middle years you have free of financially worry, the more time you have to be free and cherish others.

  • Alex says:

    Its strange that such a small percentage of the population save any significant percent of their income when just looking at the facts make it obvious that it makes sense! I guess its simply a matter of people making decisions based on emotions instead of login….Yes the $70 per iPhone plan is expensive but it sure looks nice!

  • Ben says:

    Sadly the average citizen doesn’t know that the sacrifices that need to be made aren’t always difficult ones. You don’t have to live without cable but you don’t need every premium channel either, or you don’t have to buy the biggest house in the neighborhood. However people do need to make the easy change of paying themselves first and they can move their financial goals ahead by decades.

  • Kraig says:

    I love your thinking. How great would it be to quietly save 60% of your take home pay, save up to pay cash for a house and then when your friends ask you, “How much is your mortgage payment”?, you can answer by saying, “I don’t have a mortgage. I paid cash for it.”

    Wow, the idea of it has me saving, saving, saving. I am 27, one year debt-free and have a goal set to pay cash for my first home by my 31st birthday. Yay!!

  • AJ says:

    Just came back to this post. It’s one of my favorites. Every once in a while I need to reread it and get the kick in the pants I need lol Trying to get rid of cable but I just want to be able to watch sports as they come on. Sigh. Here’s to going cable-free in 2013!

  • ParadisLance says:

    It is definitely important to realize how the choices we make impact our financial future. I feel that the road is not quite so black and white. We need to be frugal enough to max out our savings, but our lives are finite and we must enjoy each year we have! Everyone is different. For some, giving most of the non-necessities up maybe enjoyable and in the long run more beneficial, while others maybe more content with sacrificing dining out and getting a new car. We need to remember that life is also about the here and now. Many of us, preach to always think ahead and plan ahead for retirement and the rest of your life, but we need to consider that everyone has desires and there needs to be some room in the budget for that!

    With that in mind, I am all for saving absolutely as much as I can. I am someone who will spend hundreds of dollars on someone else and be perfectly fine not spending a penny on myself! The point you make about saving 12 times as much as the average American and retiring decades earlier, really hit home and I will definitely incorporate that idea into my writings.

    I enjoy reading your blog and have a like-minded blog that I just started myself. It’s if you care to take a look! thank you in advance!

  • Harry King says:

    I like how you constantly put on this post, It can be done, but it’s not easy. True that, some sacrifices need to be done. Buy what you need and and save the rest. But rewarding yourself is a must, that way you are still enjoying while saving.

  • I used to eat lunch out every at work – leading to major $$ and extra lbs. I make my lunch every day now and it’s super easy, I feel healthier, and it costs so much less.

    I agree with your assessment that it’s almost “easier” to buy all this stuff and follow the norm than to stick with the basics.

    I made that mistake a few years ago. Got pumped about my high salary and bought tons of stuff. Now I have to reverse that course.

    Good luck in your path to FI!


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