FINANCIAL INDEPENDENCE

MADE SIMPLE
AN ILLUSTRATED GUIDE

Brad Barrett
Jonathan Mendonsa

MORE FREE RESOURCES TAKE THE FI 101 COURSE ORDER THE CHOOSE FI BOOK
WELCOME TO CHOOSE FI
Earn more. Spend Less. Enjoy the journey. These three ideas behind Financial Independence are
simple. Yet, they’ve made an outsized impact in our lives.

They’ve allowed us to leave our jobs in corporate America and to pursue businesses and projects
that light us up. They’ve allowed us to be present for our families and to reclaim decades of our
lives back. They’ve allowed us to attain mastery, autonomy, and purpose in the things we choose
to do, on our terms.

We discuss these ideas behind FI in depth in our book ChooseFI: Your Blueprint to Financial
Independence. We’ve also crafted an online video course in case that is your preferred medium.

Because we know every one of us learns in different ways, we’ve also created this illustrated
guide to break down FI into simple actionable steps. These steps may be simple, but that’s not
the same as being easy. Financial independence is a personal choice and journey - so if
something doesn’t fit your lifestyle - that’s okay! Use the tips you find helpful and toss the rest!

To help you stay the course, we’ve created more resources and a community of more than
75,000 individuals who are on the same journey.

We think your 10-year future self will thank you for

choosing financial independence, and we welcome
you to YOUR ChooseFI family!

Brad Barrett
Jonathan Mendonsa

MORE FREE RESOURCES TAKE THE FI 101 COURSE ORDER THE CHOOSE FI BOOK
 CONTENTS
01 FI Starts With Savings
As a rule, you should aim for a savings rate 40-50%. That
probably sounds like a lot–and it is! But if you adhere to the
traditional 15% savings rate, it would take 40 years to reach
financial independence.
Saving Tip
Are you taking full advantage of your employers retirement
savings program? If your employer has a 100% match you
can DOUBLE your savings by maxing your contribution.
02 Lower Living Expenses
Lowering your living expenses can help you reach financial
independence in two ways:
1. Lower living expenses allow you to save more money.
2. Lower living expenses means you need less needed in
your nest egg.
Living Expenses Saving Tip
Have you considered cutting your cable/satellite and use
Netflix and other less expensive options for entertainment?
Also, try driving an older car or negotiating for a lower cell
phone bill.
03 Eliminate Debt
Prioritizing paying off debt is important on the path to
financial independence. The sooner you pay off your
consumer debt the sooner your financial freedom
clock begins.
Eliminating Debt Tip
If you currently have credit card debt, consider doing a
balance transfer over to a card with a 0% intro rate and pay it
off as quickly as possible.
04 Use Travel Rewards!
The path to financial independence is not about living a life of
deprivation. You can travel more than you realize for free or
very cheaply using travel rewards. The general idea is that
you use credit card rewards (earned through sign-up
bonuses) to cover your travel expenses.
Travel Saving Tip
If you don’t have excessive credit card debt and can responsibly
manage credit cards, consider a card that has travel rewards.
05 House Hacking
Housing is likely your largest expense. Getting this for free or
very cheap goes a long way towards increasing your savings
rate. House hacking is when you find a way to eliminate or
greatly reduce your housing costs.
Housing Saving Tip
Do you have a family member or friend you can share housing
with? Can you buy a duplex and live in one half while renting
the other half? Can you downsize your home to reduce costs?
06 Automotive Hacking
Aside from housing, your car and the costs associated with it
is likely one of your largest expenses. Reducing or eliminat-
ing the amount you drive can help you reach FI faster.
Automotive Saving Tip
Can you rideshare or take public transportation to work? If a
car is necessary, drive a car that is reliable and inexpensive
to maintain. Finding a mechanic that is specific to your car
can also save you money.
07 Hack College
If you choose to go to college, don't pay full sticker price! By
optimizing all the great programs and scholarships out there,
you'll save thousands of dollars in tuition and living expenses,
and maybe graduate quicker too. 
College Saving Tip
Contributions to your state's 529 plan are often deductible
from your state's income taxes. Consider maxing out your
annual tax deductible amount.
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 01 FI STARTS
WITH SAVINGS
Simply put, the goal of the FI movement is to save 25 times your annual expenses.
It is thought that once you have this amount saved you can begin withdrawing enough
from your investment accounts to cover your expenses. At this point you would be
considered “financially independent” and no longer need to work for money.
How much should you invest?
The FI community puts a lot of emphasis savings rate of
40-50%
on “savings rate”. This is the percentage
of your income you are saving or
investing. As a rule, we aim for a
That probably sounds like a lot–and it is!
Traditional personal finance usually aims for a 15% savings rate. But
then it can take 40+ years to reach FI. Seem impossible to save that
much? We have tips and tricks for lowing your living expenses. One
place to put a part of your savings, like an emergency fund, is with
a high-yield savings account.
Broad based low cost index funds
There are a multitude of studies that show that on average, actively
managed mutual funds struggle to match and often under perform
their relative indexes. In large part, this is due to the headwind of the
higher fees that are associated with actively managed funds as
compared to index funds.
An actively managed fund that charges 2% per year would need to
outperform the index by 2% just to match what you could earn in the
index. This is extremely difficult to do over longer periods of time.
You can invest in the low-fee Vanguard Total Stock Market ETF (VTI)
using a fee-free trading account, like with M1 Finance.
A total stock market fund will track the stock market as a whole.
Your returns will match the returns of the market. If you would like to
include bonds in your portfolio, the same can be said for a total bond
market fund, such as Vanguard's Total Bond Market Fund.
TABLE OF CONTENTS
It makes the FI
community unique
Aiming for a 50% savings rate is
one reason the FI community is
so unique. We all work together
to share tips and encouragement
to live this lifestyle. This is
support and information
you won't find at
your neighborhood
barbecue.
The 4% Rule “Of Thumb?”
Saving 25 times your annual expenses, where did that
number come from? It is largely based on a 1998 study
called the Trinity study which looked at what percentage
of investments a retiree could reliably draw throughout
all investing timelines without running out of money.
The study concluded that 4% was a safe
withdrawal rate with a 95% rate of success
This study is not without some well founded criticism,
in particular it has been questioned whether the
data from this study could be extrapolated from
the regular retiree with a 30+ year retirement to
the early retiree with a 60+ year retirement timeline.
Rental properties are loved
investments by the FI community.
For a small down payment there is the potential to
immediately generate cashflow and many people
in our community have beaten the game using this
strategy. This strategy is put into overdrive when
you stack with a concept like house hacking.
Home
For Rent
01 INVESTMENT HACKS | 02 LOWER LIVING EXPENSES
 02 LOWER
LIVING EXPENSES
Lowering your living expenses is a major focus for the FI community. Having lower
expenses allows you to reach financial independence more quickly for two reasons. First,
it allows for a higher savings rate. Every dollar you don't spend is a dollar you can invest.
Secondly, lower annual expenses reduces the amount needed in your nest egg. Review these
cost saving tips and implement the suggestions that make sense in your life.

Shop around for Install a smart,

the best deal on automated home
home, auto, and Reduce expenses on thermostat system.
life insurance. clothing, grooming, and
consumable habits (like
smoking and drinking
Greatly reduce or alcohol.)
eliminate your
cable bill.

Reduce or eliminate
monthly subscriptions Sell unused
like newspapers and items for cash
magazines.
Use cost effective
entertainment like
Netflix and Hulu.
Reduce your cell
phone bill lowering
your data usage or Drive an older car
use a prepaid plan. 71
that does not have
a car payment.

Reduce your food

cost by cooking
meals at home.

Have a green thumb?

Try growing your own
vegetables to save
money on groceries Use public transit or
ride a bike to work.

TABLE OF CONTENTS 01 FI STARTS WITH SAVINGS | 03 ELIMINATE DEBT

 03 ELIMINATE
DEBT
There are two schools of thought for paying off debt. The first way is to pay off the
account with the smallest balance first. This will give you a good place to start and you will see
and feel progress toward your end goal quickly. The second way is to pay off the account with
the highest interest rate first. This will get rid of your most expensive accounts first, thus
saving you the most interest over time. Choose the strategy fits you best. The most
important part is to stay motivated to keep paying down debt.

Explore refinancing your student loan

Create a budget. Knowing exactly where debt. Look into Credible to see if
you are spending your money each month refinancing it would save you money.
will allow you to make better decisions. Or, consider consolidating your debt.
You can spend money on things that are The less interest you pay the more you
important to you, while cutting out things can save for financial independence.
that are not. You might be surprised at
how much money you can find to pay
towards debt when you are spending
with intention.

Pay more than the minimum

balance. Even if it is only $10.
Every dollar extra you can pay
means paying less in interest.
Getting a quarterly or holiday
bonus? Put your extra cash
toward your debt instead of a
vacation or home upgrade.

Can you transfer your balance to

a card with 0% interest? This
can help save you a lot of money
on monthly interest charges.
Cut up or hide credit cards from
yourself. You will be surprised how
much faster you can pay down
credit card debt when you do not
carry the card around with you.

TABLE OF CONTENTS 02 LOWER LIVING EXPENSES | 04 USING TRAVEL REWARDS

 04 USING TRAVEL
REWARDS
The path to financial independence is not about living a life of deprivation.
You can travel more than you realize for free or very cheaply using travel rewards.
This is an easy way to reduce a large expense in your annual budget! The general idea is that
you use credit card rewards (earned through sign-up bonuses) to cover your travel expenses.

Heads Up...
This strategy isn’t for everyone!
If you have a poor credit rating, you use credit cards to make it
from paycheck to paycheck, or, you are about to apply for a
large loan, this strategy is not for you.
1 Find the right travel rewards card
for you
First, consider what travel you and your family
like. Do you have a honeymoon to a tropical
location coming up? Or maybe a family
vacation to a theme park? Do you value flight
miles or maybe hotel reward points?
Understanding what travel rewards are
offered by different cards will help you narrow
down your search. Also consider the annual fees
that different cards have (and if they are willing
to waive for the first year.)
Utilize additional earning
3 opportunities
If you live a very frugal lifestyle and do not have
enough expenses to run through the card, plan
your minimum spend around a big purchase.
The card can be used to pay your property
taxes or income taxes, and if you are close but
need a little extra, you can get a jump on
holiday shopping.
Do NOT open department store cards
5 off after a few months. Then the credit card
This is a waste of an application. Department
store cards often have a low limit and can only
be used at their store. The rewards you get from
department store cards is often very low.
Don't waste an application to save $10 on your
bargain clothes when the alternative is getting
hundreds in free travel.
Understand the spending
2 requirements
Most cards will have a minimum spend
requirement to earn your sign up bonus
rewards. In order to reach your spending
requirement, put your food and gas and some
discretionary spending on the particular card
that you have signed up for, and use that card
exclusively until it is finished or nearly finished,
then pivot to the next card. Don’t be in a rush -
as long as you complete the minimum spend
requirements in the specified amount of time
you will earn your rewards.
4 Use your reward cards with a purpose
Travel reward cards usually offer more in terms
of rewards than cash back cards. For example,
if a cash back card offers 1.5% in cash back then
spending $3,000 will earn you $45. However,
with a card that offers travel rewards, that
same $3,000 in spending may get you between
$600-$1,000 in free travel. In order to
maximize your rewards, stop using your credit
card sporadically, but instead use it with
intention and purpose.
6 Understand how this strategy
affects your credit score
When you open a line of credit, the company
offering the credit does a hard pull on your
credit score. The hard inquiry will decrease
your credit score by 2 to 5 points, and this rolls
company also looks at your utilization. If you
have a $20,000 limit and only owe $100, this is a
low utilization rate. A low utilization rate is
looked at favorably and can boost your credit
score. Again, this strategy of using credit cards
for travel rewards is only recommend for people
who can keep a $0 balance month-to-month.

Want to travel for almost free?

Sign up for our totally free course!

TABLE OF CONTENTS 03 ELIMINATE DEBT | 05 HOUSE HACKING

 05 HOUSE
HACKING

On average, housing Room

accounts for around

For Rent

33% of your budget. RENT A ROOM

Consider some of these Have a spare bedroom or office you can
rent out? This allows you to both reduce your
house hacks to lower housing costs and invest in real estate. Say you MODIFY A VAN
purchase a three bedroom home and have a $1,500
your living expenses. per month mortgage payment. If you rent out
Just you? Consider modifying a van into
a tiny home and living here.
two bedrooms for $700 each, your monthly
housing cost is now $100 per month!

MOVE TO CITY WITH A BUY A

LOWER COST OF LIVING
If your income is not tied to a physical
location, you can significantly reduce your
expenses by moving to a location where
the cost of living is lower.
MULTI-FAMILY HOME DOWNSIZE YOUR HOME
Consider buying a multi-family home. In the market for a new home?
Consider how much room you actually need
If you purchased a duplex, and your mortgage
was $1,200, can you rent out the other side and downsize to a smaller home that
is more affordable
for at least $1,200? This is the ultimate
form of house hacking.

Remember!
Some cities and HOA’s
have regulations on
home rentals. Check
the rules in your area
before deciding
to rent.

TRADE FOR HOUSING

Do you know an elderly person who could
use help? Consider living with an older person,
helping them with household tasks in
exchange for housing.
USE AIR BNB
Do you travel a lot? Have a big event in
your town? Consider renting your home
while you are away. You could pay for a
month of your mortgage is just one
weekend!

TABLE OF CONTENTS 04 USING TRAVEL REWARDS | 06 TRANSPORTATION HACKING

 06 TRANSPORTATION
HACKING
Aside from housing, your car and the costs associated with it
is likely one of your largest expenses. Reducing or eliminating
the amount you drive can help you reach FI faster.

Reducing the number of miles you Of course, driving your car less will Driving an older, used vehicle will save
drive every year can put you in a extend the life of your vehicle and you money. It is usually less expensive
less expensive insurance category. reduce maintenance costs. to keep an older car on the road then
make payment on a new vehicle.

Drive for a ridesharing app. Rideshare

Can you ride your bike
to work or to run errands?
Biking can save big bucks
on car expenses.
apps let you choose when and where
you drive, so you could pick up a ride
during your commute and get paid for
going where you need to be anyway.
You can even expense most of the
commute! Don't want to drive people
around? No worries, your car will still Is your work location too far
make you money! to ride your bike? Consider
taking public transportation
like the bus or lightrail.

It’s a fact: some cars are just made to last

Search around your area for longer. It’s easier for you. Consider these
the best mechanic for your models that make it to 200,000 miles with
car, whether it’s a Toyota or the least amount of problems.
Tesla. Perform regular
maintenance to prevent • Toyota Camry • Honda Civic
issues. • Honda Accord • Toyota Corolla
• Toyota Prius • Toyota 4Runner
• Honda CR-V • Toyota Highlander
• Toyota Sienna • Ford F-150

TABLE OF CONTENTS 05 HOUSE HACKING | 07 COLLEGE HACKING

 07 COLLEGE
HACKING
At ChooseFI, we know college is not for everyone. There are plenty of high demand,
well paying jobs that do not require a college degree. However, if your child's dreams include
college, you'll want to start working now to reduce the cost. No need to pay hundreds of
thousands of dollars to obtain a degree. Here are several college hacks that can
lower the cost of college and avoid some, or all, of their student loans.

Housing for your student.

Can your student live at home and
commute to school? This could save
$10,000 a year! If that is not feasible,
consider house hacking, which is
buying a home and renting to other
students to cover the mortgage.
Learn more about house hacking
Working in College
Now that your student is in
college, they should be doing Complete the FAFSA application
what they can to earn an income. Your student should complete the
Maybe it’s finding work in the application for Federal Student Aid
university or a gig off campus. (FAFSA). Not just for the chance to score
Consider rideshare side hustles a Pell grant or some funds from the Develop a scholarship plan
college of choice, but many private- Have your student make a scholarship plan
that are more flexible as early as junior year in high school. Look
sector scholarships require this as part
of their application process. for dozens of smaller scholarships of
$500-$2,000 each that require a short essay
and prioritize those rather than shooting for
one big one. Your student should batch
Lower your taxable income multiple applications in one sitting to save
time and have a template essay to tweak
Work with a CPA to lower
for each application.
your taxable income. The
less assets you have in
taxable accounts, the more
likely your student
is to get aid.

Stay close to home

Consider having your student
stay in state. Even if an
out-of-state institution is more
prestigious, in-state schools can
cost half as much.

Consider Dual-Enrollment
Consider having your
student do dual-enrollment,
earning college credits while
still in high school. Or take
gen-ed courses at a less
expensive community
college and transfer credits
to a four year institution.

TABLE OF CONTENTS 06 TRANSPORTATION HACKING

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