8 Paths to Financial Independence

Financial Independence Path #1 — The Slow-and-Steady Conventional Path

All money advice is ultimately advice aimed at helping you attain financial independence. So even the most popular writers, people like Suze Orman and David Bach, are in a strict sense part of the Retire Early Movement. As a general rule, however, the conventional advice does not work. If it did, a high percentage of the population would be attaining financial freedom early in life. That’s obviously not the case.

This doesn’t mean that there is not good advice put forward in the books of people like Orman and Bach. There is. But those seeking early financial independence need to do better than most of those who rely on the conventional guidance. Those who put their faith in the most popular money gurus may be able to retire at age 65 or perhaps a bit earlier. It’s not realistic to expect to do too much better than that by following The Slow-and-Steady Conventional Path.

Paths to Financial Independence
Our movement does not reject the conventional advice. It rejects the idea that it is sufficient. We aim higher. We seek to do better. We view the conventional advice as a base of knowledge to which we add more exciting ideas for the purpose of achieving financial independence a good bit sooner.

Financial Independence Path #2 — The Mind-Over-Matter Motivational Path

I included The Mind-Over-Matter Motivational Path in this listing to provide me a place to discuss inspirational speakers like Tony Robbins. I am not familiar with most of Tony Robbins’ work (if you feel that I have misrepresented him, please let me know). I wanted to include this path because of the attention that has been directed to “The Secret,” a book with which I am also unfamiliar that urges an inspirational approach for people hoping to achieve ambitious life goals.

I obviously am not overly excited by inspirational speakers or I would spend more time learning about their work. I am not dismissive either, however.

My belief is that inspirational speakers are onto something important. The hardest part of attaining financial independence is saving money. The hardest part of saving money is working up the motivation to do so. The primary reason why the practical steps that are the focus of most guides urging The Slow-and-Steady Conventional Path don’t usually lead to early financial independence is that readers of these guides do not become sufficiently excited over their content to change their money behavior in significant ways. Knowing all the practical stuff in the world won’t help you if you are not highly motivated to act on it.

So I see the material generated by those urging The Mind-Over-Matter Motivational Path as having value, perhaps equal or even greater value than the material generated by those urging the Slow-and-Steady Conventional Path. This path does not excite me too much either, however.

What works is to marry the motivational with the practical. Practical stuff standing alone is boring. Motivational stuff standing alone is ineffective. Working together, these two approaches acquire far more life-transformational power than either possesses on its own. I see it as the first goal of the financial independence quest to determine how best to mix the motivational and the practical and thereby to discover what actually works for real live people in the real world.

Financial Independence Path #3 — The Hustling Maverick’s Path

I view Robert Kiyosaki, author of Rich Dad, Poor Dad, as someone who has tried to mix the practical and the inspirational and who has created an explosion of interest in financial independence as a consequence. It amazes me how many people love Kiyosaki; it sometimes seems that his works are going to take over the entire money section of the bookstores. It also amazes me how many people hate Kiyosaki; I have been on discussion boards where the mention of his name has brought on foaming-at-the-mouth reactions on the part of large percentages of the board communities.

Strange Path to Achieve Financial Freedom

The Kiyosaki phenomenon tells us that something important is up. That’s my take.

The people who have achieved some success in their money lives tend to be people who have followed the rules better than most others and who take pride in having done so. Kiyosaki is disdainful of the rules. Many of those who have achieved a good measure of financial success view Kiyosaki’s message as a threat.

I think that Kiyosaki is onto something in questioning the conventional rules. The rules that used to work are not likely to work as well in the future. Those who resist acknowledging that find Kiyosaki hard to take. On the other hand, those who agree that following the old rules will no longer work tend to be too willing to believe that Kiyosaki has the right answers, in my assessment.

I see the Kiyosaki path as The Hustling Maverick’s Path. Being a maverick makes sense. Hustling makes sense. I am personally not persuaded that Kiyosaki has developed the best possible vision of how to attain financial independence early in life, however.

Financial Independence Path #4 — The Struggling Middle-Class Worker’s Path

Amy Dacyczyn (she is the author of The Complete Tightwad Gazette) is my favorite money writer. She’s different from most others in many ways. One of the most striking ways in which she is different is that her work focuses on the needs of people who do not make big incomes. Her path is The Struggling Middle-Class Worker’s Path. Amy Dacyczyn focuses on the hard case rather than the easy case.

By doing so, she shows that amazing things can be done, things that no one before her attempted to do. It’s her focus that makes the difference, I believe.

Most money writers start out accepting that it is hard to get by even on an income that is large by relative standards (most money guides are aimed at high-income people and those earning high incomes today are earning far more than just about anybody ever earned in earlier days). If Dacyczyn started with that assumption, she would never have been able to have done the work she has done. All of her work is rooted in the assumption that it is possible to get by and to get by well with remarkably small amounts of money. She makes the case in impressive article after impressive article after impressive article after impressive article. By looking at the money problem from a different angle, Dacyczyn was able to come up with solutions than no one who came before her even bothered to consider.

Dacyczyn doesn’t focus on financial independence (she does make brief reference to it from time to time) because that is not the first concern of her readership. All the same, she tells us all more about what it takes to achieve financial independence than any other money writer. If her advice helps those with modest incomes get on their feet, what does it do for those with incomes a bit above the modest level? It tells them that for them financial independence is an available option amazingly early in life.

Financial Freedom DreamDacyczyn’s writing is often dismissed by mainstream writers as “extreme.” That’s a dumb criticism. Dacyczyn obviously never compels anyone to adopt any suggestion she puts forward. What she does is to show us the options available to us. All middle-class workers are able to retire early if they elect to do things that some view as “extreme.” Some can achieve financial independence very early in life indeed. The negative reaction to Dacyczyn’s work results from the unease that some feel in knowing that these options are available to them.

It is wrong to find fault with a writer for showing us that we possess options that we did not know were available to us. Dacyczyn’s advice is generally practical in nature. Read between the lines, though, and you pick up a powerfully motivational message: Follow Dacyczn’s lead and you can be free of paycheck dependence a lot sooner than you once thought was possible. No one has married the practical and the motivational as well as Dacyczyn, in my view. She is the best financial freedom writer around.

Financial Independence Path #5 — The Intelligent Idealist’s Path

Joe Dominguez (co-author of Your Money or Your Life) is in second place. Dominguez offers a nine-step plan for achieving financial independence early in life that has been successfully followed by millions. And his approach works primarily because it so motivates his followers that they come to center their lives on their desire to follow it closely and obtain its rewards as quickly as possible.

The problem with the Dominguez approach is that most of us are not as idealist as the typical Dominguez zealot (I don’t intend that to be taken as a put-down). Dominguez sought to obtain financial independence by his early 40s so that he could devote his remaining years to pursuing the environmentalist causes that are his passion. His approach works. He was able to leave paid employment in his early 40s. Lots of others have been able to do so by following his guidance. But how many of us are willing to change our lives around so that we can pursue nonprofit causes? Some are. Most are not.

I believe that the success of the Dominguez book is well-deserved. He understands money and how it works in people’s lives better than any of the better known names in the field, in my estimation. But I believe that the Dominguez approach can achieve its full potential only if his program is expanded to provide guidance for the millions who have different sorts of life goals than the life goals pursued by Dominguez and his followers.

Dominguez’s ideas work not just for those who want to pursue nonprofit causes. They work for those who want to be increasingly free of economic insecurity as they age. They work for those who want to be able to retire early. They work for those who want to start their own businesses. They work for those who want to make career shifts in which they pursue work that pays less but provides a greater sense of fulfillment. The Intelligent Idealist’s Path is a path of great potential that as of today is not fully realized.

Financial Independence Path #6 — The Disgruntled Cubicle-Dweller’s Path

John Greaney (owner of the RetireEarlyHomePage.com site) is the nemesis of the Retire Early movement. He has led a Campaign of Terror against our discussion boards for over five years (this article was posted in July 2007), burning several entirely to the ground and intimidating the owners of several others into compromising the integrity of their sites in very serious ways. He is likely the most abusive poster in the history of the internet (measured by the destruction he has done to the work of thousands of good people) and his presence should not be tolerated by anyone with even a minimal desire to help people learn what it takes to win financial independence early in life, in my view.

All that said, I believe that Greaney represents something real and important and that his path to financial independence — I think of it as The Disgruntled Cubicle-Dweller’s Path — should be included in our list of the available options. Greaney’s message is a message of anger and contempt and hate. A not insignificant number of today’s workers respond to that message. You don’t have to like it; I certainly do not. You do need to come to terms with the reality, if you hope to develop a complete understanding of where our movement is headed in days to come.

With Greaney supporters, it is always the other guy who is to blame. It is their employers who cause all of their discontent in the workplace, never their own choices. The answer to life’s problems is to avoid or ignore responsibilities, never to learn lessons from one’s experience of the troubles that all of us walking the Valley the Tears are required to endure from time to time. The purpose of financial independence is to escape the outside world, not to make efforts to reshape it in some positive way. There is a market for this vision of financial independence among the cubicle dwellers of today. Most of us obviously do not relate to this vision. But some of us do.

I have sympathy for some of the complaints about the workplace raised by the Greaney supporters. I’ve been in staff meetings that went on too long. I’ve suffered the frustration of working for one or two bosses who were clueless about some aspect of the work they were overseeing. I see this path of negativity as a dead-end, however. It makes some people feel good to think that they have discovered a means to “stick it” to their employer. But this path leads only downward, and never upward. My advice is to be aware of this path and to take what good you can learn from those traveling it (Greaney supporters have things of value to teach us) but not to get too caught up yourself in the negativity that is the driver of this vision.

Financial Independence Path #7 — The Non-Consumerist DINK’s Path

Paul Terhorst’s book Cashing in on the American Dream is a brilliant work written ahead of its time. The problem with it is that it is written for the high-income professional without children who is willing to trade the expensive cars and the expensive houses and the expensive vacations and the expensive country clubs for a life of freedom from the need to work. Terhorst points us to a means of attaining financial independence early in life. The Non-Consumerist DINK’s Path really will take some people to the place where they want to go. This approach works.

Get to the Top of the Mountain

The problem, of course, is that the Terhorst path is so limited in application. Most of us are not DINKs (a DINK is a married couple with a double income and no kids). And many DINKs enjoy their jobs so much that they see no great appeal in leaving them behind. So this is not a vision that is going to take the world by storm anytime real soon.

It’s worth studying the approach, however. What can be done by DINKs in very little time can be done by the rest of us in a good bit more time. Most of us can obtain some version of the financial independence enjoyed by Terhorst. The principles and strategies explored in his book have general application, even if the precise details of the particular program examined do not.

Financial Independence Path #8 — The Holistic Soul-Searcher’s Path

This is the Rob Bennett approach. I have tried in my book Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work to put forward a vision that takes advantage of the insights of the other available financial independence visions while avoiding the pitfalls that have limited the success of some of them.

I acknowledge the workplace problems that fill the disgruntled cubicle dwellers with such anger and have tried to put forward a more positive approach for dealing with these problems. I appeal to people’s idealism in urging them to use their desire to do wonderful things with their lives to motivate better financial decisions without going so far as to suggest that we all need to retire from the corporate workplace to sign up with nonprofit organizations. I encourage the exploration of frugal ways of living without showing disdain for the consumerist choices that I believe have added a great deal to many middle-class lives in recent decades. I take a maverick position on many topics as a result of my belief that the old rules no longer work while showing what I hope is the proper measure of respect for the good that has been achieved in earlier times by the conventional money advice.

You do not possess financial independence today. You know that you want to come to possess it at some time in the future. Learn more about the eight paths to financial independence outlined above and you will learn that you can in all likelihood get from where you are today to the place where you know you someday want to be much sooner than you now realize is possible. Talk to people in our community and they will tell you that it’s an amazing journey, one that will change not only your money choices but your choices about just about everything you do with your life energy from the time you wake up in the morning until the time you drift off to sleep at night.

Money decisions are life decisions. Attain financial freedom and you gain the ability to do with your life what you always wanted to be able to do with it. It’s not just about saving your money. It’s also about saving your life.