Quickest and Most Realistic Way For Average Person to Achieve Financial Independence

The couple referenced in the link below graduated college in 2008 and earned $50,000 combined in their first year as teachers. After 8 years, they were earning $100,000/year combined and were saving about 80% of their income, which they mostly used to purchase rental properties as the housing market declined after the Great Recession:

The newlyweds maintained their cheap college lifestyle, saving around 80% of their income. All of their savings went directly into buying rental properties. Flash forward to 2020, and the couple now has 19 rentals across the U.S. They quit their jobs in 2015 when their investments were able to fully replace their nearly $88,000 combined salary. 

https://www.cnbc.com/2020/09/10/how-to-retire-early-using-real-estate-investing-and-rentals.html

There are many ways to become financially independent. From inheriting a ton money to starting the next Amazon.com business but in my opinion, I think the most realistic and straightforward way for the average person to become financially independent sooner rather than later, so long as they have the motivation and economic opportunity, is to have a high savings rate and to purchase multi-family units to generate rental income.

Saving 80% of your income is incredible if you can do it, but the highest savings rate Mr. Money Elite’s household has ever achieved was probably 30 or 40 percent. I don’t have the exact numbers on this, but based on a chart of my assets that I’ve been tracking for the past several years, in 2018 my family was able to increase the amount in our savings account by almost $40,000 that year. 2018 was also the first year that my wife began working full-time, so a huge part of the high savings rate was driven by that. Mrs. Money Elite actually began her full-time employment in the fall of 2018 so as a result our combined income that year was about $146,000 gross (before any taxes or deductions).

The following year was the first full calendar year where my wife and I were both working full-time and combined we earned about $159,000 gross in 2019. We probably would have earned a little more last year but my wife went on maternity leave which reduced her income for several weeks while she was out.

I wish I could say my savings rate in 2019 was even higher than it was in 2018, but based on a table of my expenses in 2019, it looks like we saved less than $5,000 last year.

We completely remodeled our basement last year along with some other home improvements and paid off one of our car loans about four years early so that’s a big part of the reason why my household savings rate isn’t higher, but those are non-reoccurring expenses which will either increase the value of my assets (home) or reduce debt (car loan).

My household income in 2020 will be considerably lower since I decided to take a year off work, but when I come back like Jordan wearing 45 I plan to substantially increase my savings rate and hopefully begin purchasing multi-unit properties sometime in 2021, if not sooner should the right opportunity arise.