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Top 5 Factors that Make Financial Independence Easier to Achieve


How easy or difficult will your quest to achieve financial independence be? The math doesn’t much vary from person to person. You’re going to want at least 25x your future expenses saved up or passive income that exceeds your spending.

If you don’t have either, or some combination of both capital and passive income, that can be expected to cover your future expenses indefinitely, you’d be hard-pressed to call yourself financially independent.

If you feel like financial independence is out of reach, perhaps you can tip the scales in your favor by understanding the factors that can make FI more easily attainable.

Some of these may be somewhat or completely out of your control, but there are likely changes you can make in several of these categories that will shave years off your of your time to FI.


Top 5 Factors that Make Financial Independence Easier to Achieve


1. A High Income


If you said, “Thank you, Dr. Obvious,” I say “You’re welcome.”

The most important factor in reaching financial independence is your savings rate, the difference between how much you earn and how much you save and invest.

It’s tough to have a high savings rate without a high income. What goes into having a high income?

A big part is your career choice, but your job title isn’t everything. Within each career, there is a broad range of salaries. Learning to negotiate effectively for yourself has a huge return on investment. Have you read Never Split the Difference? If not, you should.

Promotions and the raises that come with them go to people who go the extra mile, or at least they should. Office politics aside, the more indispensable you become or appear to be, the more likely you are to be rewarded with a job promotion and a bigger paycheck.

In medicine specifically, it’s no secret that some specialties pay better than others. The latest Medscape Compensation survey shows that orthopedic surgeons are making nearly $500,000 on average, whereas pediatricians, family medicine, and infectious disease specialists are at the other end of the spectrum with salaries just above $200,000.

As I implore in a post on How to Choose a Medical Specialty, money shouldn’t be the only factor, but it probably should be a factor. Interestingly, Infectious Disease doctors are also among the happiest, leading the specialties among those who would choose medicine again.

The salary range within a particular specialty is surprisingly broad. Some hospitals and groups can simply afford to pay quite a bit better than others. The difference between academic and private practice has become more narrow in terms of both job description and pay in recent years, but private practice still tends to pay better. The gap will vary by specialty and location, but be sure to look into that gap and what it means for your financial future when choosing a position.


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2. A Second Income


What’s better than one great income? More income! A second income can come from one of two main sources.

The first would be a “side hustle” or side gig that may or may not be related to your primary career.

The side hustle is the subject of numerous sites and forums. You can see what other physicians are doing in Facebook Groups like Passive Income Docs. Non-physicians have places like Nick Loper’s Side Hustle Nation and others.

I’ve published posts from Bryan’s Black Bag and Passive Income MD discussing med school side hustles, and there are plenty of options for established physicians, as well.

This website has become my source of a second income, but it’s not my first side hustle. I’ve worked extra shifts at my main jobs, spent vacations working for other organizations as a locum tenens physician, and I did nothing but locums work for two years out of residency. If I added up every pay stub from my traveling work, the sum would likely have a second comma.


2 weeks of work, 112 hours, $20k of taxable income


It helps to have a job that pays well (see #1 A High Income) but even in such cases, a second income can dwarf the first. My friend Dr. Jim Dahle has seen his income from The White Coat Investor easily surpass that of his clinical work as an emergency medicine physician.

Of course, not everyone has time for a second job or an interest in finding one. I’ve got good news! You don’t necessarily need a second job to have a second income. You would, however, need someone to do the work.

A second household income can simply come from a second household partner. In this millennium, dual-income households are more the norm than an outlier, but if you’re trying to figure out how to fast-track your path to FI and you’re doing it with one income in a two-person partnership, it’s not tough to see where some additional income could come from. Whether or not that solution makes sense in your circumstances depends on many factors, but it’s best not to overlook what may be low-hanging fruit.


3. A Low Cost of Living Area


I’ve spent most of my life in relatively low-cost of living areas, at least in terms of the cost of housing and everyday items. In terms of state income taxes, I’ve spent most of my life in one of the most expensive places for a physician to live.

While a 9.85% marginal state income tax in Minnesota makes a damaging dent in the takehome pay, having affordable housing and neighbors who aren’t big spenders can be even more important in terms of building wealth.

In a lower cost of living area, the fact that you’ll pay less for a home, the things you put in it, the property taxes on it, and the gasoline for the car in the garage has obvious benefits. It’s also true that the car in the garage is less likely to be a luxury make because you just don’t see many around town and the temptation isn’t there. #stealthwealth

If you are the average of the five people you spend the most time with, it would make sense that your spending habits are likely to be closer to the average of the spending habits of the people you spend the most time with.


I’ve chosen to live in rural areas because my wife and I both grew up in small towns and wanted a similar experience when raising our own family. We weren’t trying to hasten our FI timeline, but that has been a wonderful side effect of our choices.

There’s plenty to love about the city and the coasts, too. I get that. I’ve spent at least a little time in most major cities in the U.S. and we’re adding to the list of international cities we’ve visited, as well. We love exploring new places, visiting museums, parks, libraries, and restaurants.

I feel we’ve had the best of both worlds. I’ve had a career working in places where rush hour doesn’t exist, parking is free and easy, and locking home and car doors is optional. What may be lacking in local culture can be made up for with frequent trips around the country and throughout the world.

There’s also this awesome phenomenon for people who are happy to live in “flyover country” — we get paid more. Geographic arbitrage is real and somewhat unique to medicine. Not only does Middle America cost less, but it also tends to come with better physician salaries, on average.


4. A Low Cost of Living Lifestyle


Small pond living won’t get you very far in terms of growing wealth if you’re only there because you want to be the biggest fish. I’ve definitely met others who also prefer small-town life but for a different reason than me. They find it much easier to stand out.

I’ll admit to being afflicted when I landed my first permanent job. We built a big, beautiful, blue behemoth of a house that was surrounded by more modest ranch homes. I was a young doctor, I stood out, and that was just fine by me.

I no longer feel any need to scratch that itch. We spent less than half on our next home compared to that first one, and our current home was another intentional downgrade, at least in terms of size and price, from both that first home and subsequent homes.

It’s not that I don’t know what I’m missing. I’ve sampled luxury. I’ve used travel rewards points, CME money, and even my own dough to stay in some really nice places. I’ve sipped ridiculously expensive wine and champagne. I’ve spent big bucks on a good steak dinner or three.

To me, the value just usually isn’t there. Yes, a 5-Star resort is nicer than your average Hyatt or Hilton, and Manny’s can prepare a fine filet mignon. But I can sear a scrumptious sirloin on the grill, and all I really want at the end of the day is a comfortable bed. I’m equally as comfortable, if not more so, at a 3-star or 4-star hotel.

A good way to find your sweet spot for spending is to cut out all but the necessities, figure out what you miss the most, and add conveniences and subscriptions back one at a time as you see fit. See the Frugalwoods for a more detailed explanation of the approach.


5. Minimal Debt


Any debt, whether it’s consumer debt, student loan debt, or mortgage debt, will count against you in the net worth department.

The smaller your debts, the easier it will be to achieve financial independence. It’s best if you understand this before you accumulate crippling debt levels, but it’s never too late to make progress. Every dollar you use to pay off debt improves your net worth by a dollar and it’s one dollar you’ll never pay interest on again.


“An ounce of prevention is worth a pound of cure.” -Ben Franklin


If you’re going to use credit cards, use them responsibly and always pay off the balance in full every month. Try not to take out loans for vehicles and other depreciating assets. If you can’t pay cash for a boat, RV, or donorcycle motorcycle, you should probably wait until you can afford it outright.

Regarding student loans, prevention means applying for copious amounts of scholarship money and considering in-state public schools. No matter your anticipated future profession, live like a student when you are a student. The same goes for medical trainees. Live like a resident as a trainee and afterward so you can quickly pay down that balance.

If you’re not pursuing loan forgiveness and have high-interest loans, you should refinance them yesterday. [Update: This is NOT true for federal loans in the time of COVID, as student loan payments have been suspended in 2020. It remains true for those who have private loans and/or have refinanced with a private lender previously.]

Refi rates can be under 2% if you meet all the right criteria and most people with halfway decent credit can currently refinance to around 5% or less. There’s no excuse to be paying 6.8% or more on any of your loans if you’re not planning on PSLF.

In terms of mortgage debt, the best thing you can do is avoid a huge mortgage. I like a 15-year mortgage as it forces you to make larger payments and typically comes with a lower interest rate. It also pairs well with the live on half challenge. In about the time it takes to go from broke to financially independent, you could also own your home completely.

In some locations, it’s impossible to avoid high housing costs whether you’re buying or renting. Think long and hard before choosing to make such a place your home.

Should you pay off a mortgage early? The math usually favors investing more while keeping the mortgage, but that depends on investment returns, of course. I chose the sure thing and opted to be debt free by forty. We’re preparing to purchase our next home with cash. Doing so also keeps your budget reasonable.


How I Achieved FI More Easily


I benefitted from most of these. I reached FI at age 39 largely because I had a high income in low cost of living areas, working that geoarbitrage.

I also had a relatively low cost of living lifestyle for a physician, although I will admit to living a bit larger than the average American.

In terms of debt, I once took out a $500,000 construction loan (and spent every last penny), but I was able to overcome that choice, eventually selling that home to become debt-free about eight years later.

I had manageable student loan debt at a level 30% to 40% lower than the average graduating medical student at the time that I finished in 2002. A combination of family help, generous scholarships, in-state tuition, and eight years of college apartment living kept that balance in check.

The one that I cannot claim is #2. At least 99.9% of our household income came from one source: my clinical work as an anesthesiologist. I can now claim a second source of income, but I didn’t think to start a blog until after we were comfortably FI.

Finally, I must acknowledge the privilege I had growing up in a two-parent household that valued education and respected money. As a white male, I’ve been given opportunities and the benefit of the doubt that others might not get so easily. I don’t apologize for these things, but I do recognize the role they can play in giving one a sizable head start.



Which of these factors has been the biggest factor in your path to financial independence? In what areas do you think you could improve?

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15 thoughts on “Top 5 Factors that Make Financial Independence Easier to Achieve”

  1. Pingback: Love your job? Why you should still pursue financial independence - The Physician Philosopher
  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Helpful for me was to max out 403b/457 contributions—it was easier to save the $$ if I didn’t get my paws on it. I was able to save enough to retire at 61 yo despite working part-time in a lower paying primary care specialty, mostly by maxing 403b every year, plus some 457. I know I probably wouldn’t have done as well if I’d had to transfer those $$ to Vanguard on my own.

  4. Good post. I think high income and relatively low expense are both equally important. We aren’t extreme on either of these, but we’re better than most people. We did pretty well.
    I’m not sure if the 2nd job is that important. It only works out well for a very small number of people. Most people probably should focus on their main job to generate the bulk of their income. GOod post.

  5. While I don’t (and never did) earn a physician’s salary, I made it to 6 figures the last few years of full time work. I went a bit overboard when building my horse barn and it took quite some time to pay all of that off. I do love my barn however and have gotten 19 years’ use out of it thus far.

    I married the wrong person and unlike many, my divorce actually helped me out because without him I was able to return to my frugal ways and lower my COL dramatically, in spite of a mortgage that was $300/month higher due to having to buy him out of the farm… so in essence, I “bought the farm”!

    Lowering my COL without moving and working my tail off for the past 15 years made all the difference. I’ve juggled a “day job” in IT and have run a horse boarding farm as a side hustle. The boarding operation hasn’t made nearly as much money as I was hoping, but it has afforded me a generous amount of deductions off of the farm income… the depreciation on barn, fence and equipment has helped a lot to shield the side hustle from taxation. But it’s been a LOT of work.

    The most important thing that got me to FI was saving 40% of my income and paying off all debts including my mortgage. Like PoF, I went for the sure thing. I like that my monthly expenses are so low now and no matter what I can afford the operating costs of my farm even if not working. I totally wasn’t comfortable retiring (the first time) when I still had a mortgage.

    Now that I have been working part time I can save at least half of my income, and work is optional. It is nice to know I can walk away any time, and still be OK.

  6. Definitely agree with the low cost of living area and lifestyle. I don’t know why it’s been so surprising to me, but it does shock me how much faster and easier it is to spend money than to make it. It just takes a bit of trying to match your flashy surroundings before you’re sliding down that slippery slope to insolvency. I’m speaking from personal experience, of course. I’m trying to put on the brakes and climb up the mountain to FI, and it’s nice having a community to do this with!

    Keep up the great work!

    — TDD

  7. I will rank your point No 4 first. High income is not a guarantee. But if a person maintain low cost of living lifestyle, with little income coupled with discipline, one can still attain financial independence. High income will be a plus for such a person.

  8. I remember reading an article on doctor’s net worth at retirement.

    It listed three categories: 5-10 million, 2-5 million, and 1-2 million.

    The first was a physician with a high paying speciality such as a surgeon. The second was a average physician or the surgeon with one divorce. The last was a dentist, or a physician with one divorce, or a surgeon with two divorces.

    Seems it’s hard to get to FI if you keep splitting you income in half.

  9. Geographic arbitrage and a very high income as a radiologist are the two biggest reasons for where I am today. They both contributed immensely and allowed me to have the high savings rate I have.

    Another factor that is overlooked is to find the right partner and stay with him or her throughout. A divorce can decimate what you have built up and make you start from scratch (a phenomenon I know all too well unfortunately).

    I chose the payoff mortgage side rather than investing and the debt free mentality set a chain of events that made me want to save even more.

  10. Agree with FiPhysician. Having a cost conscience and financially focused spouse makes FI and life much more easier. No push to keep up with the Jones or to outdo her friend’s travel adventures is a major blessing. While my spouse will be retiring from medicine in July, her “FTE” will only drop from 2.0 to 1.0 since she is still the CEO of our household management! She keeps our everyday household tasks in order and moving forward while I’m living in the hospital…

  11. What about “a good spouse” for the list! I thought for sure it was going to be in the top 5.

    While you didn’t mention spouse explicitly, He or She is important in all 5 of the above. 1)Does everything else so you can make the high income (or other way around) 2) Actually makes the second income 3) enjoys living in low cost area 4) is frugal as well 5) doesn’t bring debt to the relationship.

    PoF you write frequently how important one’s spouse is and that you use “I” and “we” interchangeably. Let’s bring from implicit to explicit that if you are married, marrying the right person (and only ONE the right person) helps on par with a healthy savings rate!

  12. I agree, if you enjoy rural towns and can find a higher paying position in that town, it is definitely a win-win. Although I can’t claim it was strategic, I have lived in two small towns now (South East and New England) and enjoy these types of communities. Also, depending on what you are looking for, a lot of small critical access hospitals or community hospitals are now tied into a system in the next ‘big’ city over. This can give access to resources (and bureaucracy) : ) that otherwise might not be available. My wife is originally from a small town in Canada so it has worked well for us. Best!

  13. Completely agree on all of this, and we take advantage of most of these things, too. In fact, I think we take advantage of all of them outside of paying for cash for everything. Once our car loans are gone in the next 12 months, we will be following the entire script.

    Having a high income in a low cost of living area with friends who aren’t big spenders does go a long way. It has helped us make huge strides over the last two years.

    Great advice.

    P.S. I love the “donorcycle” reference. I’ve never heard that, but working in the OR I completely understand what that means. In the south we do have “liquorcycles” though for people who have lost their driver’s license to DUI’s.


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