Not Born to Pay Bills and Die: 15 Powerful Steps You Can Take to Reach Financial Independence Faster

It will take time to reach your financial independence goal no matter when you begin your journey. If you’re new to FIRE, the prospect of being able to choose early retirement may seem both exciting and terrifying.

So, aside from increasing your savings, what can you do to achieve financial independence faster? Cutting out the latte, switching to a prepaid phone carrier, and cutting the cable are all important, but they will only get you so far.

You’ll need to make some big, bold moves to achieve financial independence faster. You’re not pushing the gas pedal to the floor if people don’t think you’re weird. The good news is that you can!

You might not even need a lot of money to get to FI. Without amassing a fortune, anyone can achieve financial independence. This is due to the fact that everyone’s number is unique. While some aim for millions of dollars to be considered FI, others aim for a lower number due to their lifestyles.

How long will it take you to reach FI?

It is entirely up to you. If you lead an ordinary life, you may never get there. If you buckle down and take simple, yet massive, steps to cut your spending, you may arrive sooner than expected.

With that in mind, here are some steps you can take to accelerate your path to financial independence.

1. Reduce your housing costs

When it comes to your biggest living expenses, housing is one of the big three, but it doesn’t have to be that way. Focus on lowering this cost, and you’ll have won one-third of the FI battle!

Downsizing or only buying as much house as you need are two ways to save money on housing. Skip the extra bedrooms. They can be a source of money loss because you may need to keep them warm in the winter and cool in the summer. With a smaller home, you can invest the remaining funds!

Consider renting out an extra room if you don’t want to sell your house. If you choose a smaller backyard, you won’t have to spend your weekends mowing the lawn or landscaping.

We’ve always rented and have a fixed housing cost as a result. There are no surprises in the form of something breaking and depleting our investment income.

2. Downsize to one car

With the cost of owning and operating a mid-sized vehicle hovering around $8,000 per year, downsizing to one car can save you a lot of money. We had both cars paid off but decided to sell one last year because we carpool to work. This saved us at least $1,000 on our annual car expenses.

Methods for reducing your car’s requirements:

a) move closer to your workplace

b) make use of public transportation

c) carpool with colleagues

d) work from home

e) Only rent a car when absolutely necessary

f) bike to places

g) walk to places, use those feet! They weren’t created just to show off new shoes. 🙂

We sold this baby and became a one-car family.

You will save money on maintenance, insurance, and registration if you can get away with only having one car. You’ll also save time because you’ll be visiting the mechanic less frequently. Less parking space at home will be needed. You’ll also learn how to better compromise with your loved ones when it comes to car usage.

We don’t miss the second car at all and wish we’d sold it as soon as we moved in.

3. Keep track of your spending

Keeping track of your expenses isn’t as difficult as you might think. After connecting your financial accounts, you can automate the tracking of your expenses with free online budgeting apps like Mint or Personal Capital. Try keeping track of your spending for at least a month and see how you feel about your money.

Face your financial apprehensions once and for all. You must, at some point, stop digging yourself deeper into a financial quagmire. Do it right now! We’ve been tracking our finances for several years, and there’s nothing like knowing where your money is going. Take charge of your financial situation.

4. Max out all tax-advantaged accounts

The most effective way to achieve FI is to legally reduce taxes as much as possible.

Take note of how I added the word “legally” to the first sentence. We do not advocate tax avoidance, but rather the use of available resources to reduce your tax bill.

Every year, we make it a point to max out our 401(k) plans. This lowers our tax brackets. We also max out our Roth IRAs to avoid paying taxes on future earnings. If you’re thinking about retiring early, the MadFientist has a great article on which account is best for you.

We wouldn’t have gotten to FI as quickly if we hadn’t taken advantage of tax-cutting strategies. Contributing to a 401(k) is essentially paying yourself first, before paying Uncle Sam. And, with early retiree tax breaks like the Roth IRA Conversion Ladder, you may never have to pay taxes on that money.

5. Pay off all of your consumer debts

Nothing hurts your net worth more than paying interest on what you own or on purchases that are now a distant memory. At a time when Americans have the highest credit-card debt in US history, we have 1 trillion reasons to remember what got us into trouble in 2008.

Aside from paying it off to get to FI faster, keep in mind that all it takes is another deep recession followed by job loss for an American to declare bankruptcy.

Due to the high interest rates charged by credit cards, paying interest on them will also destroy any investment gains you make. Credit card debt must be eliminated if you want to reach FI sooner. Car loans must also be eliminated. All debt with an interest rate greater than 3% must be discharged.

I was buried in debt a few years ago, but I made getting rid of it all my first priority. We now pay “cash” for everything (no credit card balances), and our net worth has increased dramatically, owing primarily to our improved spending and saving habits.

6. Concentrate on what truly makes you happy

When I first started saving in 2006, it didn’t mean much to me. I did it because there was a free money incentive to do so through my company’s 401(k) match. Savings took on a whole new meaning for us after we discovered FI. It symbolized our liberty. So we save as much as we can, but we also recognize that we must enjoy the journey.

Reaching FI was our path to freedom, but being present is essential.

Why do we preach about being in the moment so much? What about checking in with yourself to see what truly makes you happy?

Because once you do, you’ll realize that material things do not bring true happiness. Your happiness is determined by your experiences and relationships. Tatiana realized this at the age of 19 and has since lived a more meaningful life. We have increased our quality of life while decreasing our spending by living according to what brings us true happiness. Know your top five!

Concentrate on what truly makes you happy and let FI be the universe that brings it all together for you.

7. Keep an eye on your lifestyle inflation

Lifestyle inflation occurs when your spending increases as your income increases. Although we do not advocate a life of deprivation, we do strongly advise you not to inflate your lifestyle when you are in debt. Increase your debt payment when you get a raise or bonus.

If you’re debt-free, boost your investments rather than your lifestyle. You can spend a little more to be more comfortable, but don’t spend it all at once. Make your money work for you until you no longer need to work for it.

8. Invest often

We enjoy making investments. It is the largest purchase we make nowadays. Do you enjoy shopping for consumer goods or assets that generate passive income? If you prefer shopping to investing for the future, it’s time to reconsider your priorities. Do you really want to live solely for the purpose of working? That alone is a compelling reason to strive for financial independence.

Change your perspective. Alter your habits.

When Friday arrives, instead of asking yourself, “How am I going to spend this money?” Consider how you intend to invest your money. Even though we are financially independent, we will continue to invest in our Freedom Fund until we no longer need to work. We enjoy investing in index funds. And every time we purchase a portion of an index fund, we are purchasing another piece of our freedom. Purchasing our time back is the most luxurious purchase we make on a regular basis.

So, invest in your freedom and do it frequently. Vanguard is an excellent place to begin investing.

9. Take advantage of all available discounts before making a purchase

No matter how little you spend, you must make some purchases to cover living expenses. Tatiana does an excellent job of utilizing multiple links to obtain significant discounts even before making a purchase. A simple extra step, such as researching an item online before purchasing it in-store, can save you money.

We were recently shopping for shoes for my father. The one he liked cost $70 at the store. Wifey recommended looking online for prices, and we found it for $55 and had it delivered in two days. That action saved us from spending an extra $15! Caching, caching, caching…

10. Reduce your dining out expenses

Eating out on a regular basis and ordering anything other than water at a restaurant will significantly increase your dining out expenses. Even if you can save $100-$150 per month on this expense, it can easily add up to $1,200-$1,800 in savings per year.

We spend an average of $275 per month on dining out. While that may seem excessive to some, we’ve cut back significantly over the years. And, yes, we spend less than the average American ($232) on meals (we spend $138 per person), and we don’t have McDonald’s. Also, while others eat out 3-4 times per week, we only eat out 1-2 times per week. The most money is usually spent when we eat out while on vacation.

We spend less than the average, but we’ve been eating out less for years. Our savings are assisting us in funding our early retirement as well as the purchase of our future home.

11. Maintain your focus on your FI goal

You’ll get there much faster if you stay focused on your goal of financial independence. Determine how much money you’ll need to declare financial independence and how long it will take. There is no “one size fits all,” so you must figure out what works for you. Once you’ve determined how much you’ll require, you can monitor your FI progress in the MadFientist’s FI Laboratory.

Continue to read about FI strategies as well. Check out ChooseFI if you enjoy podcasts. With their incredible podcast, Brad and Jonathan are truly unlocking the secrets to financial independence. These resources will help you stay motivated and will arm you for your happy journey.

12. Relocate closer to your workplace

There are so many benefits to having a short commute. Not only do you save time by cutting down on the commute, but you’ll improve your quality of life by moving closer to your job. It feels like centuries ago when we had to deal with a nasty commute to work. Just a few years ago, we had to either leave earlier than others or wait out the traffic during our workdays.

There are numerous advantages to having a short commute. Not only will you save time by reducing your commute, but you will also improve your quality of life by relocating closer to your workplace. It feels like centuries ago that we had to deal with a dreadful commute to work. To avoid being stuck in traffic, we had to leave earlier than others or wait out traffic during our workdays.

We analyzed our expenses and outlined all of the benefits of moving within a few minutes of work a year later. It was one of the best decisions we made on the road to financial independence.

13. Start new traditions and avoid the suggested high holiday spending

It’s only September, and people are already worrying about the holidays. Your time is the most valuable gift you can give to a friend or family member. Spending months agonizing over gifts that will not advance your happiness is a waste of your most valuable resource.

We stopped exchanging gifts and instead focused on other activities, such as spending quality time with our loved ones. We do not experience any stress during the holidays. Besides, if we need something, we just buy it during the year and don’t bother putting it on a holiday list.

We also celebrate Valentine’s Day in a unique way. We don’t eat out on that day and don’t bother with expensive flowers and chocolate. That’s something I’ll leave to the One-Day Romeos. Instead, I prepare a romantic dinner at home for my wife and present her with a handwritten note.

Why not branch out and become a trendsetter? Instead of following the masses’ centuries-old traditions, why not start your own?

I started a birthday tradition in 1993. There’s one song in particular that makes me reflect on my life. So I’ve been playing it every year on my birthday since then. It’s one of, if not the only, of my first birthday rituals. Because I don’t play the song all year, this makes it extra special. This costs me nothing but brings me great joy.

Do you have any special birthday traditions? You can establish new holiday customs with your family, friends, and significant others. Take charge of the tribe!

14. Postpone your purchases

Joe from Retireby40 does not have Amazon Prime, so he must wait until he has $25 in his shopping cart to receive free shipping. When he’s ready to check out, he deletes the items he no longer wants. What a fantastic way to avoid online impulse purchases!

Delayed gratification is a great strategy that everyone should adopt.” – Joe from Retireby40.

We have Amazon Prime, but I do the same thing Joe does with extraneous items. I’d put them in the cart and leave them there for days, if not weeks, and I’d find myself deleting some of the items or delaying the purchase long enough to see if it really adds any value to our happiness. If it doesn’t, I just delete it!

When it comes to shopping, procrastination is beneficial. Do you need more proof? With this post, The Penny Hoarder hit the nail on the head: Buy It Later: 5 Amazing Ways Procrastination Can Help You Save Money. Check it out!

15. Purchase a rental property first, then your dream home later

We would not have reached financial independence as quickly if my wife and I had focused on purchasing the dream home for which we are now saving. The house would have taken up far too much of our income. Rather than spending money on painting walls and replacing floors, we invested in index funds. We decided to invest the money in our freedom first, and then save some for a house later.

I purchased a rental property even before we started investing. We kept the rental property after we married, and the profits contributed to our FI goal. Renting while owning also allowed us to be flexible and mobile. We could simply relocate if we needed to change jobs.

We understand that everyone’s situation is unique when it comes to housing. If you live in a high-rent area, it may make more sense to buy. You can also reach your FI destination without any delays if you play your cards correctly when it comes to buying real estate.

Do you know that house hacking can allow you to live for free?

You can buy a multi-unit building, live in one unit, rent out the others, and let the property income pay for your housing. Coach Carson created an awesome guide, The House Hacking Guide – How to “Hack” Your Housing, Live For Free, and Start Investing in Real Estate, so that you can also take advantage of this strategy.

One more tip! Choose the right partner

Don’t you hate it when you forget an important detail?

If you’re still single, try to find someone who shares your values or, at the very least, a saver. I believe it is much more difficult to change the mindset of a big spender who values material possessions. Aside from compatibility, looking for someone who enjoys saving is half the battle won. All you have to do is convert them to the FI mindset.

I also believe that people who prefer to spend money on experiences rather than material possessions are easier to convert because they find happiness in the right places. They won’t need much convincing to understand the importance of financial independence. With a little tweaking, these can become fantastic FI partners.

My wife and I met at work, and we got to FI much faster because we were immediately on the same page. Because we both have comparable incomes, we were able to arrive in half the time it would have taken if we were single.

Closing thoughts

This is by no means an exhaustive list, but you don’t have to be a rocket scientist to become a millionaire. You’ll reach your FI goal in no time if you take simple, yet powerful steps. Whatever that number is, it should only concern you. You’ll get there if you stick to it like Forrest Gump stuck to shrimp and a fruit company.

Some steps may be appropriate for your situation, while others may not. When it comes to FI, be as absorbent as a sponge. Keep your eyes and ears open for new ideas, but above all, continue to spend less and invest more. That is the most certain way to ensure your financial freedom. There are more enjoyable things to do than work to pay the bills, and financial independence is the key to unlocking the fun.

Cheers to your financial independence journey!

What shortcuts have you taken to get to FI faster? 

José

After dedicating 13 years of his career to Vanguard, José retired from the corporate world at the young age of 44. During his tenure at Vanguard, he expertly coordinated the production of both electronic and print educational materials for 401(k) participants. Now, he relishes in his early retirement, cherishing time spent with his family, indulging in his favorite hobbies, seeking out new experiences, and savoring meals in the comfort of his own backyard.

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Chad Carson
6 years ago

Love this article! So much good advice outlined in a succinct way. And thanks for including my house hacking article! Glad that idea made it as part of the core advice.

Jose
Admin
6 years ago
Reply to  Chad Carson

Thank you! Yours it’s a great article and we’re more than happy to share it with our audience.

Tread Lightly, Retire Early

Choosing the right parter is really #1 in my opinion. I married at 21 to a frugal guy, and that alone has set us up to be in a really good spot as we enter our 30s in a few months.

Jose
Admin
6 years ago

I have to agree with you 100% on this one. As Tanya was editing this article she pointed this one out and I added it at the end. How could I have forgotten this one?!?
So yes, if you marry the right person you’ll set yourself up for financial success. Thanks for reading!

CPT obv
CPT obv
9 months ago

Echo chamber in here. People roll their eyes of seeing trite photos of people on a beach when even people who work can do that. It’s just taking a random day off. Not the flex you think it is. When you retire, go enjoy it but don’t bore other people.

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