Financial Independence


First of all, What does it mean to be financial independent?

No, it does NOT mean a bunch of dollar bills showed in the picture above. It’s rather simple, if you don’t have to work to earn $$ in order to maintain your living standard; that’s what I called financial independence.

Of course, financial independence is awesome. However, assume you are not born rich, won the lottery, etc. financial independence is NOT a free lunch.

images This is what I think of financial independent. After a long hike with your partner, finally reach the peak of the mountain and exhale.

In my opinion, reach financial independent by yourself is no fun. Have your partner to share with the experience is inseparable.

How to achieve financial independence?

There are two things that you need to consider : Income and Expense.

That’s the same as any corporation :  Revenue (top line) and Cost

Therefore, if you can achieve monthly income > expense, then you are financial independence. Similar, a corporation is profitable when revenue > cost.  When a corporation is profitable, it doesn’t require any outside money to survive.

Let’s tackle the first one, “Income”. If you don’t work, how do you earn $$? There are numerous ways, I can’t list them all. One example is you might have rental income, or you have stock dividends. However, I tend to see people who are on the path to financial independence aren’t worry much about income. What’s more important is “Expense”.

“Expense” is a lot more manageable than “Income”, whether it’s managing your family expense or a corporation expense. Why?

There are a lot of things or so-called “fats” you can cut. Let’s go through the living cost for a family :

  • House : mortgage payment, property tax
  • Utility : electricity, gas, water, internet, phone, tv, etc.
  • Car : gas, car payment, tax.
  • Food
  • Clothing


A nice-looking single family house over 2,000 square feet is selling for $132K.

First of all, for the people who are on the path to financial independence, they most likely already have a house and may even don’t have a mortgage payment. But let’s assume they do have mortgage. Then one of the biggest cost saving is to refinance the mortgage at lower rate. You won’t believe how many people still paying a higher than market mortgage rate.

Second, property tax. Well, unfortunately, this one there is nothing you can do to mitigate the cost. However, consider this :

Housing is the biggest cost of any family. You can save a lot of $$ toward housing if you move to a different part of the country. In the United States, it’s very convenient to move your family. I moved my family from East Coast to West Coast a few years ago. It wasn’t about lowering housing cost for us, but just to show it’s not difficult to move your family in the United States.

For example, if your house is worth 500k, there are other cities in the U.S. where similar or even bigger house costs only 200k. Thus, you save 300k and this 300k can go to your investment. Furthermore, since the property tax ties with the house value, you most likely will be paying a much lower property tax for the 200k house than the 500k house.


Your think your house will need electricity, water, internet, phone, cable TV, etc. or does it?

True that your house will need most of these utilities. However, you can eliminate some of them. For example, cable TV! Do you really need it?

I don’t even have TV at home. Nowofdays, you can watch most videos or streaming live on the internet, thus TV become obsolete, you could eliminate the cable TV cost completely.

Same for the phone, if you already have your cell phone, a home phone is not necessary.

For internet, shop around for the lowest plan every year, negotiate with the internet providers for better deal.

Last but not least, let me tell you how much I pay for electricity. I have a 1500 square feet house and pay about $30/month. There are quite a few people I know pay over a few hundreds dollars per month. You may wonder how do I do pay such a low amount?

Nope, I don’t have solar. Nope, my family are always home 24 * 7.

The first thing I do when I moved into my house is to change all light bulbs to energy efficient LEDs, same for appliance. The second thing I do is to make sure to turn off the lights when there is no one using it.

This is the solution, isn’t that very simple? However, very few people do it.

The same goes for water, gas etc. The key principle in cost saving is “ONLY SPEND what you NEED, not what you WANT. DO NOT WASTE”.


On KBB, this mini-cooper worth at least $11,000.

“ONLY SPEND what you NEED, not what you WANT. DO NOT WASTE”.

People in general like fancy cars, who doesn’t? I can tell you I’m not a car person. I don’t care a thing about car. Car is just a transportation vehicle to me. However, do I want a Ferrari or Lamborghini? Hell Yeah!

But I don’t need it. In fact, I don’t need a new car. New vehicle is usually an investment loss. You can find great deals in used-car market, working directly with seller, not agency since some sellers tend to underestimate the value of their cars.

Let me present you an example. 12 years ago, I bought a 7 years old Toyota Corolla (with 40,000 mileage) for $4,000 USD. I just sold it for $1000 with 190,000 miles on it. There hadn’t been any major repair, so my maintenance cost yearly for this vehicle is quite low.  Isn’t this a great deal?

Above is a picture of a Mini-Cooper for sale I saw when I was walking around my neighborhood last weekend. The price of Mini-Cooper is usually $20,000 or more when purchase new. Even the KBB price on this used Mini-Cooper on a good condition is estimated to be $11,000 from a private party. Moreover, you might be able to negotiate with the seller and get the vehicle at even lower price. That sounds a pretty good deal to me.

Furthermore, used car has a lower car exercise tax than new cars. Thus, you save on tax as well when purchase used cars.


My Homegrown Vegetables

“ONLY SPEND what you NEED, not what you WANT. DO NOT WASTE”.

Going out to restaurants or fancy restaurants are ok once in a while. But definitely a no-no if going out often. It could be one of the biggest blow to your savings.

Instead, cook at home, grocery in the United States is actually quite cheap compared to other countries. Grocery stores usually run various promotions every week, thus you can save more on the weekly specials.

You can further save on grocery by growing your own vegetables and fruits. Above picture show a picture of my homegrown vegetables.

More importantly, always remember what parents taught us at a young age : “DON’T WASTE FOOD”.


“ONLY SPEND what you NEED, not what you WANT. DO NOT WASTE”.

People tend to have so much clothing than what they need. My suggestion is to buy new clothing ONLY when the current one worn out.

Not only this save money for you, but it keeps your closet space cleaner. Furthermore, it lower your search cost, i.e. if you have less clothing to sort through, it’ll be faster to search for the one you want when you have less clothing.


If you think I’m crazy because I seem so frugal that it makes life no fun, then consider this – Warren Buffett, one of the richest person in the world, is also legendarily frugal,  living a lifestyle that hasn’t changed much since before he before he made his billions.

He is still residing in the same house in Omaha, Nebraska, that he bought in 1958 for $31,500. Moreover, he could spend a tiny fraction of his wealth to buy any car he wants every day. However, he said  “I only drive about 3,500 miles a year so I will buy a new car very infrequently.”