Financial Independence Checklist for College Graduates (My path for my kid — the first 10 years)

Intro by JL’s Team

As college seniors across the country receive their diplomas this week, we thought it would be the perfect time to resurface one of JL’s most popular posts. In this post, JL offers advice for his daughter a year before her college graduation.

If you’re a graduating senior who wants the avoid the debt trap and carve your own path to financial independence, you’ve got this. It doesn’t have to be complicated.

If your child, niece, friend, neighbor is graduating, send them this post. It may be the most valuable graduation gift they receive, because financial independence is so much more than money—it’s the opportunity to live your life on your own terms.


A year from now my daughter graduates from college. Here’s the early life path I suggest to her:

  • Avoid debt. Nothing is worth paying interest to own.
  • Avoid fiscally irresponsible people and certainly don’t marry one.
  • Spend the next decade or so working your ass off building your career and your professional reputation.
  • Spend that same decade or so living like the college student you just were.
  • Don’t get trapped by an expanding lifestyle.
  • Follow the Simple Plan to Wealth.
  • Save and invest at least 50% of your income. Put this in VTSAX or the equivalent as we discussed here.
  • Fund any 401k plan you are offered.
  • Fund your IRA.
  • If you do this for the next ten years or so, you’ll be financially independent.
  • If you save more than 50%, you’ll get there sooner. If not it will take a bit longer. (*See the chart below for an idea of how long)
  • If you get lucky with the market you’ll get there sooner. If not it will take a bit longer.
  • During this accumulation phase, celebrate market drops. During these each dollar you invest buys more shares.
  • Sometime in your early to mid 30s two things will happen: Your career should be hitting its strongest surge and you should be financially independent (FI).
  • Once 4% of your assets can cover your expenses, consider yourself FI.
  • Put another way, FI = 25x your annual expenses.
  • That is, if you are living on $20,000 you are at FI with $500,000.
  • If, like Mike Tyson used to, you are living on $400,000 a month/4.8 million a year, you’re going to need 120 million.
  • As you can see, being FI is every bit as much about controlling your needs as it is building your assets.
  • Once you are financially independent, begin living on your investments.
  • Now you can decide if you are still having fun and want to continue your career. Or possibly try something new.
  • If you keep working, invest 100% of your earnings. You are living on your investments now.
  • This will, of course, dramatically accelerate the growth of your assets.
  • This growth of your assets will, in turn, accelerate the growth of the spendable dollar amount 4% represents.
  • Now, should you so choose, is the time to begin expanding your lifestyle. Just be sure to keep it at 4% of your holdings.
  • Now is also the time to think about giving like a billionaire.
  • If you are going to have children, now is the time. You are still plenty young enough, financially secure and with FI you can arrange your affairs in such a fashion as to give them the time they deserve.
  • If you are so inclined, now is also the time to consider buying a house.
  • But don’t be in a hurry. Remember, houses are almost always lousy investments.
  • Buy one only when you can easily afford it and if it provides a lifestyle change you want. Kids and school district, for instance.
  • As long as you are working, VTSAX will serve all your investing needs. You are now investing 100% of your income so those times the market plunges are even less cause for concern. Your money buys more shares. During this accumulation phase, the ups and downs of the market matter not at all. Pay them absolutely no mind. Just keep adding to the pot.
  • Once you decide you are done working, diversify into 25% Bonds, 75% Stocks (VTSAX)

By the way, bullet point #3 is not meant to suggest you must be some sort of office drone. Think of your career in the most expansive of terms. The possibilities are endless. You might take those low-cost college living skills you’ve honed and use them to pursue any number of new adventures. Like this guy:


Ken Ilgunas and his book

You’re young, smart, healthy and tough. By your 30s you’ll have F-You Money and you should have a blast getting there. Once you’ve got it, it will continue to expand, as will your personal options. Your future’s so bright it hurts my eyes to look at it.

That’s what I have told and will continue to tell her.

So, if you are also in college or a few years out and wanted to know what your kindly old Uncle jlcollinsnh suggests, there you go. Like everything we talk about on this blog, it is all about expanding your opportunities in life.

If you are a bit more seasoned, don’t despair. Think of it as a ten-year plan you can start right now. It’s never too late. It took me decades to figure this stuff out. Like mine, your road has likely already had more bumps than those who follow this guide will endure. But those are done. It is your future that matters and that starts, for all of us, right now.

It also helps to keep a healthy perspective on just how lucky we all are. My new pal Buck is a kindred spirit and at the end of his wealth manifesto he offers this astute observation:

“Let’s face it, you are already ‘wealthy’ by almost any worldly definition so let’s keep this in perspective.  Just by reading this post we know you are:

          • In a sheltered, warm place with connectivity to the Internet.
          • Clothed (although maybe I shouldn’t assume too much).
          • Literate and proficient in one of the most influential languages in the world.
          • Probably not too concerned about from where your next meal is going to come.”

Personally I had never thought of, and especially like, bullet point #3.

Of course you’ll want to read the rest of this blog, and maybe a couple of others. You will find some exceptional ones in the blogroll to the right. My pal Darrow writes one of these and in fact he has a brand new book just out:


*Here’s the chart mentioned above and it is one of the cool things in the book:


These numbers assume an 8% annual investment return and that you’ll live on the classic 4% withdrawal rate which implies a stash of 25x your annual needs. So, not a gospel but a guideline.

My daughter will also get hers free, when I hand her my old-school print copy.

Addendum 1:

Addendum 2:  

Addendum 3: 


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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.


  1. Buck says

    Great post and I appreciate the shout-out. I’m honored.

    Like many kids I know, my boys tend to heed advice from strangers better than they do me. When they become seniors in high school, I’m going to make them do a book report (or perhaps a ‘blog’ report will be more apt) on this post and all the embedded links. This is exactly how it’s done – lots of sage guidance boiled down to bullets in this one.

    Keep up the great work.

  2. RobDiesel says

    Hey, I am sitting, nude, under the 10/35 freeway interchange in San Antonio, reading your blog on a stolen Blackberry.
    I am not proficient in Esperanto either, and as my mammy usta say “profanity is the crutch of the illiterate motherfucker”, by which I assume I am none to literate either.

    You are right about my lack of concern for my next meal. There’s a food bank down the street Imma pull a littel B&E on when it gets a little darker.

    Posted from my stolen blackberry (and all in good humor!)

    • jlcollinsnh says

      Keep reading. You’ll be rich, clothed, fed and using the phrase “mother-fornicator” before you know it.

      • RobDiesel says

        I will ascertain the vital information from your literary activities and ably master it to my own pecuniary advantage, and ensure that the knowledge will enable me to refrain from any references to copulating with anyone’s maternal unit.


  3. The Stoic says

    A great accumulation of wisdom here. I wish I had a list like this when I was younger. Actually, I wish I had listened to the lessons my family tried to instill. Sometimes youth is wasted on the young; I’m proof.

  4. Darrow@CanIRetireYet says

    Thanks for the great post and the book mention, Jim. You covered much of the terrain of my new book in your 30-some points above. Wish I’d had a road map like that at the start!

    Like you, I was fortunate to stumble onto the path before too many years passed by. As you advise, I think building the skill set to earn a solid salary, while avoiding lifestyle inflation, is really the crux of financial independence.

    And, yeah, remembering how lucky most of us are, in our own unique ways, is a good formula for staying happy on the journey!

  5. Alice says

    Ah, Dads. I’d like to see Mom’s advice too. Something like, Love someone, help someone, express your gratitude to someone every day in some way.

  6. Joe says

    This is why I love the internet!! If I had this advice when I was leaving college…. Oh, the possibilities. But, I didn’t. And that’s that. But, I have a six year old. Which means I have years to slowly bring him up to speed on this stuff. If I can teach him first and foremost to simply be good as a person. And secondly, to be good with his money. Well, there’s nothing he can’t do for the world then.


    • jlcollinsnh says


      and if he’s good with money he’ll have more resources and ability to do good as a person. 😉

  7. GamingYourFinances says

    Thanks jlcollinsnh! This is like a crib sheet for reaching FI and living a healthy financial life. All these points are great advice, especially the one about choosing friends/partner. Making the right decision here can really accelerate your plans.

    Thanks for the advice and good luck to your daughter! (Although, with this advice she’ll be making her own luck!)

  8. SavvyFinancialLatina says

    Great advice! I downloaded his book! Now unto setting my plan for the next 20 years!
    I am going to be buying a house soon at 23. Texas houses are pretty affordable, and in our situation renting is almost as expensive.

  9. Des says

    Great advice for a son. For a daughter, I would add the addendum that if she might want children (and she certainly doesn’t have to!), to try to push for the earliest FI she can. Or, at the very least, she should have the real-life numbers about what happens to fertility during one’s 30s. Most people think that 35 is still reasonably young in uterus-years, and that adoption is an easy back-up plan (neither is true).

    • DB says

      Actually! That 35-plummet-in-fertility-thing is a myth. I still think it’s wise to plan ahead, but lots of women needlessly torture themselves that if they can’t have kids by 35, it’s going to be virtually impossible. The research does not support that conclusion.

      More details:

      Salient points:

      “The widely cited statistic that one in three women ages 35 to 39 will not be pregnant after a year of trying, for instance, is based on an article published in 2004 in the journal Human Reproduction. Rarely mentioned is the source of the data: French birth records from 1670 to 1830. … In other words, millions of women are being told when to get pregnant based on statistics from a time before electricity, antibiotics, or fertility treatment. Most people assume these numbers are based on large, well-conducted studies of modern women, but they are not.”

  10. Jake @ CC Wealth says

    As a recent college graduate myself, this is awesome advice. I’m doing all I can to stick to these guidelines, but it sure can be tough. How awesome would it be to be financially independent at the young age of 35 and be able to do whatever you wanted with the rest of your life. I hope your daughter takes this advice to heart.

  11. chris says

    Nothing?? So would you advise your daughter to not go into debt to pay for college if you were unable to help her pay for a university education? (60K-160K?)

    • jlcollinsnh says

      My pleasure, Ken…

      and you certainly “Think of your career in the most expansive of terms.”

      If you get the scholarship back up and running be sure to let us know. I suspect it is the kind of thing some of our more fiscally established readers would support.

  12. CashRebel says

    I feel like you just recapped everything you’ve ever wrote. It’s hard to believe it truly is all that simple, but I do believe it is.

    So you would caution against kids in your 20’s? I know a lot of want-to-be grandmothers who’d disagree, haha.

    • jlcollinsnh says

      Ha! My work here is done! 🙂

      It really is that simple. Not easy maybe, but simple. This is the recurring theme around here. Most things financial really are simple and most times they seem complex there is somebody behind the curtain trying to sell you something.

      Never occurred to me I’ve invited the wrath of grandparents every where :), but yes, life is a lot easier with kids in a financially stable household. Better for them, too.

  13. Laurie says

    Wonderful advice for your daughter, that as a mom of 4, I really appreciate. Thanks also for the investing tips. I need to research VTSAX more, I think!

  14. Kristi says

    This is a great list. I recently found your blog and it has made for some great conversations around the dinner table. Wish this information was available to my husband and I when we were in college.

    We took the usual “American Dream” path and between the ages of 18-25 my husband and I both got college degrees along with average student loans, got married two weeks after graduating, bought a house 4 months later, adopted a dog 2 weeks after that who ended up having alot of health problems, had a baby 10 months later, and I have been staying home with him ever since. We did this all on a starting engineer salary. Those were some tough years.:) However, we were doing what we thought we should be doing. Then we came across the ideas of financial independence and early retirement and from then on we have been charting our own path. My husband is 33 and I’m 35 and we have paid off all the student loans, saved some cash for emergencies, paid a little more than 1/2 our mortgage off, and are now putting 50% of his take home pay away for retirement along with saving for our son’s college.

    Had we had this information sooner it would have made the first 10 years of our marriage alot easier and less stressful.:) However, we would not have become the people we are without it. We are doing everything in our power to offer our son an alternative to the traditional “American Dream” and your blog has been so helpful.

    Thank you for taking the time to write this blog. Your blog has given us the confidence to work with the growing amount of money we are working towards. I have always known how to save and felt comfortable with the risk of investing but with your information I feel more confident about where to put it and it makes so much sense. I have been with Vanguard for 13 years and am very comfortable working with them.

    • jlcollinsnh says

      Welcome Kristi…

      Thanks for sharing your story and your kind words. Sounds like you guys are on a great track now. No worries, I certainly didn’t know this stuff when I graduated.

      I was particularly struck by your observation: “However, we would not have become the people we are without it.” So true.

      We are all shaped by the challenges life throws our way. Looking back, I highly value my own bumps and bruises even as I know I’d not want to endure them again.

      We all hope to smooth the way for our kids. That’s the core reason I started this blog.

      But even if it does help her, and any other readers here, avoid painful financial mistakes, life will still happily provide other character building opportunities. 😉

      • RobDiesel says

        “We are all shaped by the challenges life throws our way. Looking back, I highly value my own bumps and bruises even as I know I’d not want to endure them again.”

        I suspect that’s in good part a sign of learning from one’s mistakes. If we hadn’t had our tumbles, we wouldn’t sit here discussing early retirement. We’d be out there spending on a house or two, a nice car or two, name-brand clothes for the kids, and hoity private schools or whatnot. 😀

  15. Emily says

    I think this is great advice, but it’s a big leap to say that following these steps will make you FI in 10 years. Mostly because of two variables that you can’t totally control- Your income and the returns on your investment. By my math this only works if you graduate from college earning $60k or more and live on $20k of that saving the other $40k and have an average 8% return over those 10 years (which may be reasonable spread over 30, but not 10). And then after that your expenses can never rise above about $26k, which would be unlikely if you want to start a family at around 30.
    I can tell you first hand that was pretty difficult if not almost impossible over the last decade.
    My husband and I have kept our living expenses very low, no debt, saved close to 50% of our income the last 10 years, and we’re only at about $430k. With two small children, this does not make us financially independent as it would only generate about $18k annually. I think we can be there in another 10 years which is still good, that would put us at 46 with two kids ages 14 and 10.
    I think your advice will certainly put someone on the right track, and it will make life easier for sure.

  16. Jeremy says

    There’s a lot of love (and great advice) in that list. Great post!
    I could have benefited from having such a list 20 years ago, it would have made the path to retirement a little faster. Assuming I listened 🙂

  17. Fred says

    This post is awesome. Thanks a lot Jlcollinsnh. I’m 30 and still have tons to learn from you and MMM (found your site there). Living in New Jersey and property taxes are no joke =(. I’m passing this information to my younger brother (18). I hope to get things going soon so my fiancée and I can “retire young”

    I would love to gain your opinion on my plan, but I guess that’s well suited for a different post. Thanks again and keep the awesome posts coming =)

  18. Michelle says

    I love this post. It’s so concise and makes me feel hopeful that I can and will reach FI if I stay the course, despite my late age of 41. Shared it with a friend of mine who has been trying to get her finances in order. She is only in her twenties and has so much more time for everything. I hope she will take heed of it, as much as I do.

  19. Algy says

    Just discovered your site. Great article. I agree, with the exception of the house buying points. Where I’m from I’d suggest bumping that up the list a little. In areas of decent jobs and salaries the rental prices slightly track above the cost of ownership (particularly if you can do a bit of your own maintenance). Totally concur with the approach though. Getting through college (university) with no debt is another sweet one. I like what’s happening here…

  20. Eric says

    First of all, huge fan of your writing! Thanks so much for sharing your wisdom in this blog.

    I had a question about one suggestion you made in this post: you say that once you hit your F-you money–and if you work for fun–to invest 100% of your income made from your job into buying new equity, and live off of the 4% of your current assets. Isn’t that essentially double taxation?

    You get taxed once for your paycheck, and then you get taxed capital gains for selling equities. Wouldn’t it be better to live off of your income from your job and then let your equities ride?

    Thanks for clarifying and keep up the good work!

    • jlcollinsnh says

      Thanks Eric…

      and great question. Truth is I’ve ignored taxes for the purposes of this post and its guidelines.

      The reason is the specific tax situation will be different for everybody who reaches FI.
      Some super frugal people, like Jacob of ERE fame, live on $7000 per year. 175k is FI for them. For Mr. Tyson, as pointed out in the post, it would have taken 120 million.

      The balance between tax advantaged and other investments will come into play.

      Add to this, the fact that the readership of this blog has grown to be international and each country has it’s own tax laws, trying to embed tax considerations into this would have been impossibly complex. At least for the likes of me. 😉

      My suggestion would be, get to FI first and then figure out the best tax strategy. That might well be mentally earmarking 100% of your earned income for investing and living on your investment’s 4%, while actually taking the money from your paycheck and leaving the investments to compound.

      For instance, if you hit FI with 500k while earning 40k and living on 20k you could:
      1. Start drawing 20k from your investments while investing the full 40K of income.
      2. Or simply take the 20k from income and leave the investments to grow.

      In short, understand and embrace the concept first and then implement it in the fashion that makes most sense at the time and place you reach FI.

      • Eric says

        Thanks for that timely response, really appreciate it! For Americans, since we do need to consider capital gains taxes, is the correct formula for financial independence (FI):

        (Your personal FI amount) * 120%

        I suggest 120% to account for the capital gains taxes that would reduce your take home after withdrawal. Thoughts on that?

        Thanks again!

        • RobDiesel says

          Well, that depends. If you’re living off of only that amount, do you pay the 20% capital gains, or do you pay it as income (lower than 20% if you only ‘make’ the $30K or $40K you pull out)?

        • jlcollinsnh says

          That would certainly be the more conservative approach, but of course it also delays the benefits to be enjoyed by FI.

          Keep in mind, too, that come retirement you are not going to cash everything in at once and pay the taxes due in one go.

          The problem comes it trying to make this all an absolutely precise science. The truth, as I point out many times in this series, is the future is uncertain and the road rocky. Flexibility is key.

          For instance, personally I am spending more than 4% in my retirement. I’m comfortable doing this knowing that the part of this that is my kid’s college drops off after next year and that the part that is travel is easily reduced in a pinch. I know and understand what the guidelines say and knowing this I can play with them a bit.

          If I were to seek absolute security I’d hold 100% in VTSAX and spend only the 1.5-2% dividend it throws off. Basically, I’d be tying my future to that of every publicly traded company based in the most powerful, wealthiest and most influential country in the world. Companies focused everyday on dealing with the changing world around them and all the uncertainties it can create. Nothing is sure, but I can’t think of a surer bet than that.

          But with some awareness and flexibility there is no reason not to enjoy access to a higher percentage withdrawl.

          • Eric says

            Gotcha. So basically, consult with my accountant or do some tax research when you get there. First-world problem, right? 🙂

          • Lilly Lev says

            Hello! Thanks for the great info and the book. I have 1 question. Why VTSAX and not S&p 500 for a wealth building portfolio? Is it because VTSAX is a bit cheaper to buy or because it has better returns or…..?
            Thank you!

        • Emily says

          I believe your formula should be FI=(annual expenses *1.20)*25 as you are only going to be taxed on the amount of your investments you cash out. And it may not be 20% as capital gains taxes are 15%. That’s if your not using a tax advantage account. If you’re drawing down a 401k or traditional IRA it will be income, but remember you will have exeptions for you and your dependents. The goal is to use a combination of both. Your IRA will require systematic withdraws so you don’t have a lot of control over how much you can take out at a time. It will be set for you by a table that predicts age and life expectancy.

          • jlcollinsnh says

            Good points. Let me add, here in the USA….

            When you start taking money out of you 401k/IRA accounts after age 59.5 it is taxed as ordinary income.

            It is at age 70.5 that RMDs (required minimum distributions) kick in. The amount of these is determined for you by your life expectancy and can easily push you into a higher tax bracket.

            So the trick is, between age 59.5 and 70.5, to wind down these accounts while paying as little tax as possible.

            With the various exemptions and standard deductions, here in the USA a married couple can remain in the 15% tax bractet with up to about 90k in income. Much beyond that it jumps to the 25% tax bracket.

            Now past 59.5 ourselves, what we do is each year figure out what our taxable income will be, subtract from 90k and move the balance into our Roth accounts.

            We pay 15% on that balance, but once in the Roth there are no RMDs or future taxes.

  21. Sir Klunk says

    Came across your site about 6 months ago from here in godforsaken Toronto, capital of the G8’s last surviving real estate gasbag. Your site is a breath of fresh air. Really enjoy the writing style and insight. This post, ostensibly for your daughter, really rung the bell. Moved up several spots on the Bookmarks totem pole.

    Please write about how society has gone absolutely nuts from a “personal finance capability” point of view. Financial literacy should be a subject starting in Grade 3 or at the latest Grade 8, and yet most people only end up learning about in their early 40s. (!) Ey carumba.

  22. Brian says

    Thanks so much for your blog, Jim! I find it very inspirational. As a 50 year old, I wish I’d had this advice 25 years ago.

    I have a nagging question about what qualifies as FI and your rule, “FI = 25x your annual expenses”. Is that based on total assets?

    For instance, I own a house (primary residence) worth $300k and own a rental vacation cabin worth $100k. I also have approximately $400k in investments and cash. So half of my money is in real estate, and the other half is in cash and investments. Should I be counting all of those assets, or should I not count the $300k in my house (because it’s not liquid and a bad investment)? Or, what if my investments drop from $400k to $250k on a market downturn? Would change my status from FI to not FI?

    Thanks for your advice.

    • RobDiesel says

      My thinking on that is that I wouldn’t count them.

      I count invested cash as that gives off a dividend. Houses are a liability if you have a mortgage, and not very liquid. HOWEVER, if you own your house outright, that’s savings in rent/mortgage, which means you need less money to live off of.

      If your investments drop, you should have a “cash” stash so you can survive a year or two until the market comes back up – and hopefully enough so you can invest more during the lower market.

      I have to rush to work or I’d elaborate, but I’m sure smarter people than I will chime in shortly. 😀

    • jlcollinsnh says

      Thanks Brian…

      and welcome.

      In figuring your net worth, you’ll certainly want to count your house and cabin, less any debt owed on them. Whether they are good investments or not. So you have potentially 800k to work with.

      Whether you count them towards FI depends on how flexible you are concerning them. That is, are you willing and able to sell if you need too? If not, don’t count them.

      If you own the house debt free, that does help with your cash flow and might lower your cost of living. Of course, this is not without cost. You can’t use the 300k to other wise earn money for you. For instance, 300k invested in VGSLX (a REIT index fund and a good proxy for your house) pays about 3.5% or $10,500 in annual income. This is “opportunity cost” and a very real expense of owning a home debt free.

      For more on how to look at this:

      So assuming you intend to keep and live in the house, you have 400k to generate your living expenses. At 4% that’s $16,000 per year. And, yes, if that 400k got cut to 250k you’d want to spend only 4% of that, or 10k.

      Unload the house and cabin and you’ve got another 16k per year to work with. You’ll also be unloading all the expenses attendant to the house and cabin. But you’ll be picking up rent in their place. Again, the article I linked to in this reply can help you “run the numbers.”

      Good luck!

      • Brian says

        Thanks Jim. I think I understand – if the asset isn’t generating income, don’t count it. It also sounds wise to consider a less-than-ideal-case scenario in the case of less income in a market downturn.

  23. Mrs EconoWiser says

    Hey Kindly Old Uncle jlcollinsnh 😉
    Another great post! Thanks for the positive outlook. Sometimes I feel “we started too late and will never get there” (very sporadically, though, we’re not complainypantses anymore) with me being 32 and him being 35 and all.
    I downloaded the book as well, MMM suggested a free copy via Twitter that was available for three days only. Looking forward to reading it!

    Your Eager To Learn All Things FI Dutch Niece 😉

    • jlcollinsnh says

      My daughter is now talking about grad school in the Netherlands in another year or so. Who’s knows, maybe I’ll get to meet my Dutch niece one of these days!

  24. Dtree says

    Great article!

    I have a question about REITs. Could you perhaps provide a bit more explanation about that fund? I know you are holding 25% in it. I’m wondering if you could provide more details as to the risks of REITs etc. For example, what would happen to it if there was another real estate bubble? Would you recommend for someone in their early 30s to hold it, or just the total VSTAX at this point.

    Thanks for all the advice!

  25. WFS says

    Incredible article.

    I stumbled across your blog from the forums of, and absolutely love your material and manifesto. If my father had this kind of financial sense, I could see him writing a very similar blog.

    But I have a question!

    I’m 22 and graduating from Northeastern University next May. I’m fairly confident that I’ll land a job making $40,000-$60,000 salary, which would be great given the job market for recent grads. However, I’ll have significant student loans in debt ($50,000-$75,000). This burden should be lessened a bit by my grandmother eventually passing (hopefully not for awhile) and my parents able to help out with some monthly payments, but nonetheless it’s mine to pay back.

    My question to you is, do I ignore investing in order to pay off debt as soon as possible- just work my ass off to pay off everything before I begin investing? Or do I open a VTSAX fund now (I am earning income between part time work and coop that goes to rent, living expenses and a little saving)? I really would love to open this account as soon as possible and start saving, but I want to know if this would be dumb considering I have some serious loans starting up in a year.

    I apologize for the broad range of numbers, but I’m more interested in the theory than the actual numbers at this point.

    Also, best of luck to your daughter at URI- I have a few buddies there and for your and her sake, I hope she hasn’t met them!



    • jlcollinsnh says

      Welcome Bill…
      Glad you found you way here and are finding value.

      First let me say I too hope my daughter never meets your pals. I’m tired and if I never have to geld another URI student suitor it will be too soon.

      Yours is actually a very interesting question.

      Strictly speaking and from a purely financial perspective the answer is simple. If the interest rate on your student loan is low, pay it off slowly and focus on investing. If it is high, focus on getting rid of it first and worry about investing later. In this environment, I’d draw the line at about 4%.

      But sometimes the best choice is not always purely financial. Your enthusiasm to get started with investing is a precious thing. Like all enthusiasms, if not fed it will tend to wither away. But well fed, investing becomes addictive and it is a very valuable addiction to have.

      So, if your student loan rate is 4% or less pay it off as slowly as possible and focus on building VTSAX shares.

      If it is over 4%, I’d put half my resources to paying it off and I’d feed my new investing habit with the other half.

      And by all means, if you can invest now before loan payments are due, get started. Oh, and since you have earned income, start by opening a Roth IRA. You’ll find a post on those in the stock series here.

      BTW, the minimum for VTSAX is 10K. But with 3k you can start here:

      Once you hit 10k Vanguard will transfer it to VTSAX automatically and there are no tax consequences.

      Good luck with your new career!

      • WFS says

        Wow, thank you for the detailed and timely response.

        You make a really good point about the enthusiasm part of investing and developing good habits now- I’ll read some more about Roth IRAs and get started.

        Truly grateful for your blog/advice and I’ll be sure to spread the word.

        • jlcollinsnh says

          My pleasure, Bill…

          and I appreciate you spreading the word. I don’t do much of anything to promote this blog, word-of-mouth being the really only valid way.


  26. Kyle says


    I hope you are doing well … I appreciate all of the advice you gave me in regards to my 401k and ROTH a few weeks back…

    I wanted to ask another question, now that I am wrapping up your stock / blog series. In regards to VTSMX / VTSAX … I hold VTSMX in my ROTH as we speak (about 35% as I am still diversifying to get to a 75-80% Target, my wife’s will be 100%). I have been enlightened to Traditional ROTH’s.

    My question is .. being 26 and an income of approx. 70k should I be focused on opening a Traditional ROTH account at this point in time or just stay focused on maxing my ROTH and contributing to my 401k, a little over the company match? If I leave my current employer or get fired, etc maybe consider rolling my 401k over into a Traditional ROTH at that time? I ask because you mention alot to save every penny you can, so are you talking about stashing it all in a traditional roth?

    I look forward to your advice!

    • jlcollinsnh says

      Thanks Kyle…

      I hope you are too.

      There are limits as to how much you can put in your Roth each year, currently $5000 at your age ($6000 for geezers over 50 like me).

      Fund your Roth first, then consider your 401k. As it happens, I am rethinking 401k plans and have a post in the works on it. It was inspired by my conversation with Chris in the comments here:

      In short, I have become very concerned at the heavy fees investment companies are charging for these things.

      At your income level, I’d say fund the 401k up to the match, no more.

      The moment you leave your employer, for any reason, roll your 401k into a Vanguard IRA.

      More on this in a future post.

      • Kyle says

        Thanks for the quick reply. I must say, I just finished the thread you posted above ^ and it almost sounds like my twin, ha! I bet you are thinking…”why is this guy posting under two different names”…smh.

        I also just finished reading your owning a home vs renting article and the comments there…. very informative and helpful considering the wife will be graduating cosmetology school at the end of the year and ready to make that leap :O

        Now on to the follow-up,

        I did a little digging last night and this morning, realizing that I had a brokerage link account within my IRA. Would you suggest moving that ~35k to the BL account and buying into VTSMX? As of now (we have spoke in lengths about it), I have an allocation of 65% company stock and 35% Large Cap, still working on that 95% Large Value and 5% Company we spoke about. I would like your opinion on that…I did plug some numbers and saw that Fidelity charges a $75/transaction fee.

        As of now, 10% of my income is going to my 401k and my company matches 6% for a total of 16%…about ~11k/year..still off 6k from the 17k max. I know you are currently working on an article to address this (please hurry, jk). The ROTH is maxed out …. I am in the dilemma of.. do I max out the 401k? If so, what do I do with any extra savings / money… dump into an ordinary bucket and put 100% to VTSAX?

        In case, you are bursing your coffee today, I will try to squeeze in another question… when the wife graduates at the end of the year, should I stay the course and max start a ROTH for her and max it out in VTSMX and live off of her salary? Again, if that happens what do I do with my salary that isnt in 401k and ROTH.

        Seems like there are so many decision at every corner… just when one thing gets figured out two more scenarios arise…thanks for improving your blog, it is by far the best ive seen / been apart of … keep up the great work and I will certainly keep you informed along the way!

        • RobDiesel says

          “I have an allocation of 65% company stock ”

          Just a random thought – if you aren’t really sure your company will remain afloat, be cautious. When Enron (Worldcom, etc) folded, a lot of people didn’t only lose their savings but their jobs. Double whammy.

          • Kyle says

            Hey Rob,

            Thank you for your input. I agree. It was my goof when I started working several years ago; I set the allocation to a high amount of company stock because:
            1) I didnt know much about investing.
            2) It has a 80+ year history of stability and paying great dividends
            3) I thought it was the thing to do being a utility.

            After speaking with Jim a week ago, I am working on selling most of my stake (except for 5-8%) in my company stock….so thank you for your input =)

          • Kyle says

            To touch on another subject…

            Does anyone have experience or input on using a brokerage account within my 401k to invest in Vanguard Mutual Funds (specifically VTSAX?) or is that a risky thing to do? Fidelity has poor fund choices with high ER…

          • jlcollinsnh says

            Should be fine and not risky. Once your money is in Vanguard, it is in Vanguard.

            My only caution would be to beware of high transaction and commission costs. Only with the high fees your 401k plan is likely charging. For more on that, check out the video link at the end of Part VIII.

          • Kyle says

            I just watched the video and it is a great watch that everyone should see. Its amazing to see the ineptness and hesitation on some of these major players in the retirement business. It hits home everything you say about Bogle and Vanguard! You are doing a great thing for a lot of people and we all thank you greatly! I hope you are having a great day!

  27. Jason says

    My wife and I have a 1 year old with hopefully another one on the way in the next year. Do we need term life for the next few years until we have the financial wherewithal to weather a calamity? If so do you have a recommended amount of coverage or company? We have $25,000 policies from work that can be increased to $750,000 but $250,000 seems like more than enough. Also, do you have any thoughts on disability insurance?

    • jlcollinsnh says

      Welcome Jason…

      …and congratulations!


      I really should do a post on insurance. In fact I have one in the early stages of construction titled: Insurance v. F-you Money. But with my upcoming travels it will be October before it’s done. So, in short…

      I hate insurance. Insurance companies are very good at calculating exactly what is unlikely to happen and then selling you insurance to protect against that unlikely event.

      I especially dislike life insurance and, in fact, have never personally bought any. The only times I’ve carried any was when the companies I worked for offered it at no cost to me. I always preferred added the money that would have gone to the insurance company to my own stash. But then I was already largely FI by the time my daughter was born.

      With two youngsters, you might well need some, at least until you “have the financial wherewithal to weather a calamity. and you’ve correctly identified term as the only kind worth buying.

      In decided if and how much, consider:

      —How big is your stash and how close to FI are you? The bigger and closer the less LI you need.
      —How much of a hardship would it be for you or your wife to reduce your standard of living to one income? The more flexible you are the less you need LI.
      —As to how much you need, it entirely depends on your currently living expenses and your ability to cut back if needed.

      One of the wonderful benefits of my recommendation to live on only 50% of your income, is that by living lean you need less of everything. Including insurance.

      In short, look closely and honestly at your personal situation. If you decide you need it, buy as little as possible. But, with two little ones, buy it unless you are sure it would only be a hardship, not a disaster, if you were gone. Note, unlike the insurance companies, I don’t believe we must insure against “hardship” only disaster.

      BTW, if you do decide you need it, you probably also need it for your wife. Never buy LI for kids.

      As for disability, the same as above applies. Maybe even more. In this day and age, disability is more likely than death. Plus, along with the lost income the family still has the extra mouth to feed and any care that the disability might require.

      Of course, since disability is both more likely and more expensive should it occur, the cost of DI is also higher.

      Again, I’ve never owned any. But looking back, the case could be made that I should have.

  28. Jacob says

    Hey Jim,
    First time comment here. Just wanted to say this list is very inspiring….and kind of a bummer. I’d probably need to sell my house to get started, but we’ve really planted roots at our current location, and housing prices are recovering well in my area. I think the big inspiration here for me is to increase my income as much as possible in the next 10 years, and increase my savings rate from 6% to 50%.

    It seems intimidating, but if I take my raises and promotions and throw those all at savings, we’ve be in pretty good shape. These are the principles I’m trying to teach my little brother, I told him a year ago to live on 50% of his income forever, but it didn’t sink in. Maybe this list will give him some more motivation.

    Also, just wanted to say it was great meeting you in St. Louis. I met you for a quick second and told you that you inspired me to move my entire Roth IRA to Vanguard in 100% index funds (true!). I appreciate your wisdom here, and will be diving into more posts as time allows.

    • jlcollinsnh says

      Welcome Jacob….

      Glad you found your way over here and glad you like this post. It’s one of my favorites.

      Thanks for sharing your story a bit and you kind words.

      Great FinCon, no?

      • Jacob says

        It was a HUGE blast. Connected with some amazing people, and it was wonderful putting faces to names. Some inspiring sessions, that’s for sure, and mostly just great hanging out with great friends for 4 days.

  29. Eliza says

    Hey Jim, as the rest of the commenters, I want to say a huge thank you for putting together this post. It’s really the most concise, practical breakdown of FI I’ve seen anywhere. 25x annual expenses – bam! Have to get there.

    I’m 28, and had huge life-changing luck in the last year of landing a major work project in the personal finance industry. At first I totally panicked when I started to realize how ignorant I was about how money really works. Big ugly wake-up call! But it was better now than later, and I’ve thoroughly changed so much. I’ve increased my income significantly, and am saving around 70% of it. I paid off my student loans in full, and by the end of the year I will reach the 100k net worth milestone. Which is exciting, but also clearly not good enough to be free.

    The big thing I worry about is work/life balance. Does everything work out in the end if you hide out in cash-hoarding all-work-and-no-play mode for a few years? Starting now means I only have 3 or 4 years to reach freedom before time really starts to run out on the being-able-to-have-kids clock. My income is high, and if I reclude now, I just might be able to get out the other side in time to start seriously dating and focusing on having a family. But it’s kind of terrifying.

    • jlcollinsnh says

      Welcome Eliza…

      and thanks for the kind words!

      Congrats on income increase and the 70% savings rate. That’s awesome! With the loans gone and 100k approaching I think you’ll be amazed at how quickly your F-you money will build from here.

      I’m not sure why you feel you have to be in a “cash-hoarding all-work-and-no-play mode for a few years.” Unless this work project demands it?

      It doesn’t take money to play and spending your money on assets that buy your financial freedom is fun and very satisfying. At least it was for me.

      I’ve never bought into the idea that the path to FI was one of deprivation. It always felt more like simply choosing what I wanted to spend my money on. Freedom just always seemed more attractive than fancy stuff. And, maybe a bit ironically, my resources can now provide me fancy stuff, but I still don’t want it.

      No need to be a recluse or wait to start dating. Dating shouldn’t be about spending money anyway. It’s about spending time.

      As for the baby thing, in four years you’ll still only be 32. My wife and I were both on the far side of 40 when our daughter was born. Granted that’s pushing the envelope, but between that and 32 is lots of time. Plus if finding a mate and the baby comes a bit before you cross the 25x threshold, no worries. You’ll be well on the path. Just be sure who ever you chose shares your values.

      Please don’t think of this ten-year plan as iron-clad. It is a road map. Follow it as it suits you and take whatever detours appear and appeal along the way. 🙂

      So, what is this financial industry work project? Sounds wicked cool.

      • Eliza says

        Thanks for getting back to me Jim! I really appreciate it.

        The project is really interesting. I can’t say too much as it won’t go live until April, but I’m working on a small team that’s developing a tool for tracking finances for a the users of a well-known brand. The idea is to create something very simple for first-time budgeters, that only has the essential information to help people make decisions, and no more.

        Amazing how having your own finances in order isn’t a requirement to work on such a thing, but so the work world goes. We were all offered a free financial advisor and I think only one other person besides me took it. Those sessions were super eye-opening. I was raised in a family where you don’t really talk about money, and have been surrounded by friends who are terrible with it, so this is kind of a renaissance for me.

        Time is indeed what I’m worried about, rather than spending money to have fun. I’m a freelancer so the amount I make is tied to the amount of hours I put in. So picking up a ton of work means very little free time. But there is the thing I know in the back of my head that if I run a proper business I shouldn’t be the one putting in all the hours.

        It seems like so much to do at once though – can I really build a business and achieve FI and have a family all in the next 5 -10 years? Probably, if I stop panicking and start doing stuff 😛 The shock will wear off at some point and achieving these goals will be the new normal. Talking to others that have done it is hugely helpful, and I bet you’re right, everything will start to move faster now. Thanks again for sharing your writings!

  30. Wanja says

    Hi Jim,

    I have been reading your blog for some time and because I love every single post I keep coming back to it, especially to this one. I am about to graduate university and started earning already a small income from a full-time internship, of which I save at least 50%. Half of those savings I invest in a worldwide index fund, the other half I save for emergencies and traveling. While unfortunately not all your advice is directly appliccable here in Belgium, I am always very excited to find alternatives that are locally available and match your ideas presented in this post, which I absolutely love.

    All the best for you and your family,
    A loyal reader,

    PS: If you want, please give me some feedback on the article I wrote on

    • jlcollinsnh says

      Welcome Wanja…

      Thanks for your comment and your very kind words. It makes my day to hear this blog has meant so much to you.

      Congratulations on your 50% savings rate! But I am curious. If the other 50% goes to travel and emergencies, what do you live on? 🙂

      I also read your post. Very nicely written and, of course, I fully agree with your ideas in it. If you care to, you might also post a comment with a link to your post here:

      This way more of my European readers are likely to see and benefit from it.

      All the best and enjoy the journey!

      • Wanja says

        Thank you, Jim. You are really an inspiration to me and a man I look up to; personal-wise and also career-wise.

        What I meant was that I live and pay rent on 50% (or less), invest 25% and save 25% of the total sum I make from the internship. Probably less impressive than you thought. As a student, my parents still want to support me financially but I prefer to be self-sufficient. For me it’s all about getting the right mindset. I am putting a lot of effort into my future career and I think that despite my small income, I’ve temporarily found a good balance between investing and living frugally without having to miss out on some of the amazing travels I dream of. When my income doubles or triples on graduation and when I have lined the pockets of my emergency fund (which will be soon) I hope to be able to invest a much higher percentage.

        Have a great day,
        With kind regards,

        PS I read the Investing in Vanguard for Europeans article before and really like your initiative and that of Mrs. EconoWiser. Since I’m just starting out with investing, I’m not sure if I can contribute something valuable to the comments section just yet. The tax thing is still a bit over my head… Therefore I preferred to take the plunge with Meesman (like Mrs. EconoWiser is partly doing), a Dutch index specialist who takes care of all these things for me. Meanwhile I will educate myself and, maybe, find a better investment strategy. I will not hesitate to share it in the comments of your article

        • jlcollinsnh says

          I kinda figured your percentages were something like that. With that 50% savings rate I predict great financial success for you. I also applaud your commitment to being self sufficient, even with your parents being willing to help.

          I’d be interested in the story of where this financial motivation came from. Maybe that’s a post idea for your blog?

    • jlcollinsnh says

      Ah, TJ…

      That’s the trick, right?

      Twice since participating in the Chautauquas I’ve now been asked for dating advice in the 1-on-1 sessions. As I’ve written, the single thing attendees find most compelling about attending is that for the first time in their lives they are surrounded by people who “get it.” Seems we are a very rare breed.

      Avoiding the fiscally irresponsible is easy. They are common and wear their habits like a bright coat of many colors.

      Find those compatible takes a sharper eye and more patience.

      Other than that, your question is far above my pay grade. 😉

      Good luck and if you have any tips, please share.

  31. Kai says

    I currently am trying to eliminate debt so I only put money into my 401k until the company match. The rest I am trying to save money in case of an emergency such as a fire, layoff etc so I did not put this money in an IRA because its more of an emergency fund. Should this money but put into my savings account or should i open up a mutual fund or ask my bank if they have an interest bearing savings account?

    • robdiesel says

      Kai – what I ended up doing was to open a Line Of Credit account with my bank. It’s basically a credit card without the card. I can go in to the bank, or go online and just transfer out up to the credit limit ($5K or whatever might be a good emergency amount).

      What that allows me to do is to keep a few grand in the checking account for daily stuff (groceries, gas, insurance, whatever – it all goes on my credit card for points, then I pay it off each month from the checking account).

      If I have an emergency that exceeds my regular account, I can always pull from the LoC account, which obviously comes with an interest payment at that point, but it’s an emergency.

      Anyway, that allow me to keep more money invested and still have a buffer if my car blows up or something.

    • jlcollinsnh says

      Hi Kai…

      Rob’s approach is a good one and worth considering. Just remember if you do draw on your LoC, the next order of business is to pay it off as you don’t want to be carrying that loan any longer than absolutely necessary.

      If you prefer to build and hold a cash emergency fund, an FDIC insured savings account at your bank is a good place for it.

  32. Kalen says

    I can’t thank you enough for this blog! I’m 24 and am just waking up to these concepts-I feel incredibly lucky to have found them so early. I love that you have a daughter my age because reading posts like the one above make me feel like you’re writing directly to me!

    I began this financial independence blogstravaganza with Mr. Money Mustache who has really changed the way I view consumerism. Since starting (about 6 months ago) I’ve increased the percent I contribute to my 401k and have paid off all my student debt…not to mention I’m biking and cooking a lot more. I’m nearly ready to open that Vanguard account! Again, thank you much…as someone who has no formal training in financial matters, the guidance of this community is invaluable.

  33. huguenot92 says

    Hi Jim! Great blog! It is changing all my financial plan for the best. Also, I’m writing from Quebec. My first language is french so I’ll do my best to be as clear as possible

    I Tried to calculate how long it will take me to get to the FI = 25 x Annual needs. I looked with the chart in your post above about saving rates and how many years to retire. I did the calculation with a saving rate of 75% and with 10% of interest. After 7 years I was still far from FI. Could you show what should look like the calculation? That would be awesome.

    Thank again!

  34. Harvey says

    Hi Jim,

    Excellent timeless post. I wish I had discovered this 17 years ago when I was about to graduate. The only additional advice I would share with my future child beyond the ones listed above include:

    1) Get work experience very early on in your life to build skills and start earning, saving and investing sooner.

    2) Learn about taxes and how they can affect your income, investments & FI plan.



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