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7 Lessons to Reach Financial Independence in 12 Years

This website is to share information about personal finance to help create a path to financial freedom. My journey started at the age of 27. I had returned to the United States with my girlfriend (now wife) after completing an assignment with the Peace Corps. It was great to return to America, but I realized I was financially well behind friends who had skipped graduate school and two years in Africa. Most of my friends were earning good salaries and appeared financially secure. We wouldn't trade the experiences we had overseas, but I knew very little about money or investing. Fortunately, fear can be an excellent motivator.

I spent nights and weekends learning about stocks, bonds, IRAs, index funds, REITS, and real estate. The Motley Fool was a great help as were books like Rich Dad, Poor Dad and the Millionaire Next Door. Along the way, I learned that the medical device company Medtronic writes a 100-year strategic plan. I thought if Medtronic had a 100-year plan, we at least needed a 30 year plan.


I used various retirement calculators to determine how much we needed to save to be financially free. Saving this amount would allow us to retire at the age of 57 while continuing our lifestyle including traveling. This seven-figure sum was daunting at the time. My annual salary was $24,000 and my wife was making about $30,000. My net worth was $1,500. Although we designed the plan to take 30 years, we reached our financial goal in only 12 years. Since then we have hit this financial goal two more times. We achieved a second goal of living overseas and spent 18 years living all over the world. I chose to retire at 50 and now take on projects that sound interesting, but we are never required to work again. Below are some lessons we learned along the way.

The 7 Lessons We Learned to Help Us Reach Our Goals:

1. Ask For A Raise: In my first job I thought I was being underpaid so researched what my skills were worth in the market and asked for a raise. If I was not successful I could search for another position that paid more. Fortunately,  I worked with a great team and I was able to secure a $10,000 raise moving up to $34,000. I was also able to move to another position in the same organization that provided a similar raise a year later. Lesson: You increase your salary if you ask for it. You can't get what you don't ask for.

2. Max Out Your Tax Deferred Retirement Accounts: If your employer offers a tax deferred retirement account like a 401k or a 403b it is one of the best ways to get an immediate return on your money. Many plans have an employer match on your contribution which provides an immediate return on your investment. Plus you can defer the income tax on your contribution amount until you retire. As you withdraw these funds in retirement you will likely pay less tax on the money by being in a lower tax bracket. Personally we put our contributions in S&P 500 index funds and try to forget about it. Lesson: If you invest money before it ever touches your hands you will never miss it and if there is an employer match you made a nice return from day one.

3. Buy a House that Comes with a Roommate Who Funds Your IRA: What has now become commonly known as house hacking was one of my smartest initial investment decisions. I bought a two bedroom one bath condo close to public transportation that had a $900 monthly payment. I immediately found a roommate who was covering more than half of this expense, plus half the utilities. I used this extra rental income to boost my retirement savings by opening a Roth IRA. Lesson: All of the money that went into my IRA came from the rent from my roommates.

4. Live Below Your Means: Paying $5 for Starbucks and $15 for lunch is a great way to work in an office until you are well into your 60s or 70s. We did not think these lunches and drinks are worth an extra decade of working. We brought our lunches from home everyday for years. Lesson: Bringing lunch from home everyday and making our own coffee paid my annual property taxes and home insurance, and helped us save the down payments for rental properties.

5. Find Cheap Entertainment: We were living in Washington DC at the time and took advantage of many great experiences for a fraction of the regular price. Stand in the back of the Shakespeare theater to get a deeply discounted ticket price, plus at intermission you can take any open seat. Hand out programs at other theaters and you can watch the performance for free. Buy a t-shirt at a major comedy club and attend the show every Tuesday for free. There were also many great speaker programs at universities and the Smithsonian museums.  Over the years we saved thousands of dollars on entertainment. Lesson: With a little research and planning you can get the same rich entertainment and cultural experiences for a fraction of the cost.

6. Learn About Taxes: Most people slip into a mild coma when you mention taxes. But learning about taxes is probably one of the most important tools for wealth creation. We volunteered with the IRS for their Volunteer Income Tax Assistance (VITA) program to assist low-income people to complete their taxes. The IRS provided us with weekends of free tax training and provided a way for us to give back to the community. You could also apply for a seasonal part-time job with a tax preparer during tax season which will also offer tax training while earning additional income. Lesson: We used our tax knowledge to buy a condo with a $5,000 tax credit that covered the entire down payment. Continuing to learn about taxes has saved us thousands over the years.

7. Buy Rental Properties and Trust Your Numbers: We used a buy and hold strategy to buy real estate with an eye to paying them off early. We also made sure that we did not become over leveraged by taking on too much debt. We invested in the Washington DC area and then switched to other cities. We saw that housing was becoming over valued ahead of the global financial crisis in 2007-08. We stopped buying real estate and sold a few properties. Our calculations indicated properties were becoming highly overvalued, so we stopped buying properties and sold a few. When the financial crisis hit we were able to weather the downturn and pick up a few more properties at a steep discount. Lesson: You will make mistakes along the way, but if you limit your downside risk and trust your gut when the numbers don't seem right, you will be successful in the long run.

As a result of these seven strategies we were able to live the life we wanted to live, travel the world, and hit our desired net worth goal in 12 years, which was 18 years sooner than we thought. 

Become Loaded for Life: The Books

If you are interested in learning more about our strategy please read the book Become Loaded for Life! available on this website at the link Read the Books. If we had the lessons in the book when we first started we would have shaved years off our plan. There is also a separate 10 Stages Workbook that describes in detail 70 specific steps to implement a plan to create wealth, become financially free, and maximize happiness. We hope these tools help advance your goals and we wish you the best of luck as you pursue your goals.

Disclaimer: These articles are not financial, tax or legal advice. Please consult a financial advisor, attorney or tax professional for specific financial or legal questions. Readers are advised to perform their own due diligence for investments, taxes and financial or business decisions. All articles are copyrighted. 

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