Personal Finance

The 30-Something’s Guide to Financial Freedom

Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Personal Finance, Real Estate Investing Basics
120 Articles Written
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You’ve reached your 30s, and from here, it’s all corporate climbing and suburban barbecues, right?

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Sure, if that’s what you want. Or you can get serious about financial independence and replace your 9 to 5 job over the next five or 10 years, achieving complete freedom to spend your life however you like.

Your 30s are a time to stop trying to live by other people’s standards. Trying to impress the world is a trap for 20-somethings; dig yourself out of it and start focusing on your own unique priorities.

You can have any life you want, but if you don’t get intentional about creating it, you’ll just end up living the default life of everyone around you. Here are six steps to break that mold, live your own perfect life, and make your job optional in the bargain.

Step 1: Track 3 Critical Numbers

When you get serious about building real wealth, not just running on the financial treadmill, there are three crucial numbers you need to start tracking every month.

Savings Rate

Your savings rate is the percentage of your income that goes toward savings, investments, and/or debt removal. For example, if you earn $5,000/month and put $2,000 of it toward investments, your savings rate is 40 percent.

FIRE Ratio

The FIRE ratio is also referred to as the FI ratio. This is the percentage of your monthly expenses (not income!) that you can cover with your passive income from investments.

The acronym FIRE stands for financial independence, retire early. If your monthly expenses total $3,000 and you currently bring in $300/month in passive income, your FIRE ratio is 10 percent.

Net Worth

Your net worth is the sum of your assets (not including your primary residence), minus the sum of your debts and liabilities. Exclude equity in your primary residence because it’s not an investable asset—you can’t access it without selling your home or taking on personal debt.

As a sample net worth calculation, if you have $50,000 in an IRA, $75,000 in a regular brokerage account, $125,000 in rental property equity, and $25,000 in student loans, your net worth is $225,000.

silhouette of man wearing backpack climbing uphill in sunshine

Step 2: Pay Off Unsecured Debts

Unsecured debts, such as credit card balances, personal loans, and student loans, tend to be expensive.

Consider that the average interest rate on today’s new credit cards is 19.24 percent, according to WalletHub. And some cards charge as much as 25 percent!

Student loan debt is usually cheaper, but it's still expensive. As a general rule, you want to pay off any debts that cost more than you're likely to earn on investments.

For example, if the stock market historically returns around 7 percent, and your student loan debt charges 7 percent interest, it makes more sense to pay off your student loan debt than invest in stocks.

Why? Because you can get a guaranteed effective 7 percent return by removing the debt, compared to a possible 7-plus percent return on stocks.

No matter what your personal financial goals are, unsecured debts hanging around your neck will slow your progress. Pay them off as your highest financial priority if you still have any by your 30s.

After all, being debt-free is a sign of financial stability and helps you devote more of your money to savings and investments rather than lining a banker’s pockets.

Step 3: Set Your Priorities

Life involves tradeoffs. If you want to lead a happier, more meaningful life, you need to prioritize what you personally want most.

That’s the crux of lifestyle design. While the term is often abused and misunderstood, lifestyle design revolves around intentionality and prioritization.

You can have anything you want, but you can’t have everything. You can spend every penny you earn on a big house and a fancy car and look rich to your friends. Or you can live in a modest home and drive a beater and accumulate real wealth through investments.

And sure, if you earn $500,000 a year, you can have the fancy house and still accumulate wealth, but you’re probably working 70-hour weeks.

These are the tradeoffs.

What are your priorities? Put every piece of your life under the microscope here: your career goals, your dating and family goals, your financial goals, what city you want to live in, your work schedule, and so on. Take some time to write out all of your goals—then put them in order of priority.

Spoiler alert: you will almost certainly have to sacrifice lower-priority goals in order to achieve higher-priority goals. And if you don’t prioritize, life will prioritize for you, and you’ll end up sacrificing thoughtlessly rather than intentionally.

I sacrificed a six-figure job with great benefits in order to start my own business, set my own hours, and spend most of the year traveling internationally. Years later, I still don’t earn what I once did. But my priorities are flexibility, independence, and travel, which meant giving up security.

Related: The Remote Landlord: How I Live Overseas & Still Manage My U.S. Rentals

Step 4: Boost Your Savings Rate

It takes money to grow your net worth and passive income. And that money comes from your savings rate.

Before you go crazy on coupon-ing and trying to save a dollar here and a dollar there, start with the top three expenses that eat up 70 percent of the average American’s budget: housing, transportation, and food.

Try eliminating your housing payment by house hacking. You can house hack the traditional way by buying a multifamily of course, but you can also house hack single family suburban homes, as well.

I go about it differently: my wife intentionally took a job overseas that provides us with free housing.

For transportation, find ways to get rid of cars. According to AAA, the average car costs nearly $9,000 a year—an enormous encumbrance on the road to financial freedom.

My wife and I chose a home where we can each get to work without driving. Walking, biking, carpooling—find a way to get around that doesn’t require every family member to have a freakin’ car.

Finally, there’s food. This one’s simple but not easy: stop eating food prepared by someone else. Or rather, file it as an entertainment expense, not a food expense.

When you eat meals prepared by someone else, you’re outsourcing the labor and paying extra for it. Prepare every meal for every family member—breakfast, lunch, and dinner—and watch how much less money you end up spending each month.

Related: Extreme Budgeting Tips: Save Up a Down Payment Fast

man looking out over river at cityscape and sunset

Step 5: Avoid Lifestyle Inflation

Over time, you’ll earn more money.

Great! Cause for celebration, right?

Nope—at least not if celebrating involves moving into a more expensive home, buying a more expensive car, or spending more on entertainment. It doesn’t matter how much money you earn, you will never build wealth if you spend most of it.

As both your salary and your passive income rise, hold your spending steady. This is how you accelerate your savings rate and investments and how you can compound your returns.

Every 30-something I’ve ever interviewed who reached financial independence has mentioned this point. They kept funneling their income into investments, even as their income started snowballing. It’s how the Hoefler twins replaced their 9 to 5 job in a few years. It’s how Brady Hanna went from $0 to $40,000/year in rental income in a few years.

It’s how you can do the same.

Step 6: Replace Your 9-5 Job

If you no longer want to rely on your job to pay your bills, you need to reach a 100 percent FIRE ratio, which means having enough income from investments to cover 100 percent of your monthly expenses.

That passive income could come from rental properties, from stock dividends, from private notes, from crowdfunding investments. It can even come from selling stocks. As long as you keep the withdrawal rate under 3.5 percent, stock portfolios should theoretically keep growing forever (at least based on historical performance).

I recommend investing in rentals and stock index funds—rentals for ongoing income, index funds for diversification and long-term appreciation. Start with the part-time investor’s guide to generating passive income from rentals.

Once you’re financially independent, you can quit your job, travel the world, stay home with your kids—or not. You could keep working, or volunteer full-time for your favorite cause, or simply work less and do more of, well, whatever you want.

FIRE by 40?

If your 20s are about learning how to be an adult and moving beyond proving yourself to the world, your 30s are about learning how to create your own uniquely perfect life.

Rather, they should be. Most people simply keep doing more of the same—an endless cycle of working, spending, sleeping, and vacationing two weeks a year.

What would it take for you to reach financial independence before reaching 40? It’s not a rhetorical question. As an exercise, spend the next five minutes writing out your own plan for what it would take.

Remember that lower personal spending helps you get there doubly fast. It boosts your savings rate while also setting a lower threshold for FIRE. Spend less, invest more, and avoid lifestyle inflation, and you’ll find yourself financially independent in no time.

hard-money-lenders

What’s your target FIRE date? What’s your plan to get there?

Let me know in the comment section!

 

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their ...
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    Tom Phelan Real Estate Investor from Key West, FL
    Replied 10 months ago
    Great article. Any 30-year-old is also a prime candidate for LIRP and should use it to insure “Tax Free” and “Risk Free” income at retirement. Don’t be surprised if you don’t know what “LIRP” because your financial Advisor isn’t going to tell you about it but the majority of his wealthy clients use it.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Thanks Tom, and now I’m thinking I should pay more attention to LIRPs!
    Esteban Cardenas from Southeast Idaho
    Replied 10 months ago
    I turn 37 May 1st. My goal is to have a 100% FIRE by 40 using rental real estate. I also plan to teach this to my children so they can start on this much earlier than I did.
    Eric Carr Real Estate Broker from Los Angeles, CA
    Replied 10 months ago
    I always enjoy your articles, thanks brother
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    I always appreciate your comments Eric! 😉
    Danny M Volz Rental Property Investor from Killeen, TX
    Replied 10 months ago
    Great read, thanks to this I’ve setup a budget which has helped lower my eating out expenses and put them into savings for future investments. As well as avoiding lifestyle inflation to add to that savings. Thanks
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Glad to hear it was useful for you Danny! Sounds like you’re off and running.
    Susan Maneck Investor from Jackson, Mississippi
    Replied 10 months ago
    I’m not sure I would agree with you about getting rid of unsecured debt first. To me it is all about low interest and maintaining a good credit score. I’ve funded more than one real estate deal with credit cards, the trick is to use balance transfers to keep the interest down. I would agree that it is wise to pay off student loan debt asap, however. If things ever go sideways student loans can’t be discharged in bankruptcy. One thing I don’t understand about all the FIRE talk, however, is how do you plan to pay your medical expenses?
    Vaughn K. from Seattle, WA
    Replied 10 months ago
    Set up an HSA, which is also another awesome tax dodge. Honestly HSAs are how everybody should handle their healthcare, the tax incentives for employers to provide insurance has done more harm to healthcare than anything.
    Samuel Pentowski
    Replied 4 days ago
    That would work if healthcare isn't expensive. In the US we have some of the most costly healthcare in the world, thus insurance is generally a good thing to have. I do agree that having an HSA is an excellent tax dodge and is helpful in situation insurance doesn't cover, or won't cover a procedure.
    Kevin K. Specialist from Suffolk County, NY
    Replied 10 months ago
    Great article! I like how you emphasized that house hacking can be done with single family homes in the surburbs. Many people believe they need a 2-4 family home in order to accomplish this. However, a one-bedroom apartment can yield and extra $1,000 per month or more (my area-NY) which can take a nice chuck out of your current mortgage payment or save for a future investment property. Especially when considering many of us have growing families and living in a 2-bedroom apartment in your 2-4 unit property, May not be feasible for very long. Thank you again !
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Thanks Kevin, and it’s so true, people often dismiss house hacking because they don’t want to live in a multifamily, but you can also do it in a SFH. Cheers!
    Vaughn K. from Seattle, WA
    Replied 10 months ago
    If you’re buying for it intentionally MIL cottages or apartments in the main house are not hard to find!
    Bukka Levy Real Estate Agent from Petaluma, California
    Replied 10 months ago
    It’s always beneficial to hear this every so often as reminder to stay on track.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Glad to hear you enjoyed the article Bukka!
    Clint Diven Rental Property Investor from Louisville, KY
    Replied 10 months ago
    Great read, as someone who is in my mid-twenties, my over all goal is to retire by 45 with 100% FIRE ratio, I understood most of these concepts but did not know their names! Thank you!
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Sounds like you’re off to a great start Clint, keep it up!
    Vaughn K. from Seattle, WA
    Replied 10 months ago
    I wasn’t bad compared to most, and it was largely a bit of bad luck that slowed me down, but if I had been more hard core in my mid to late 20s as my income was ballooning, I could be retired already at a decent standard of living. But my goal is to be able to by 40 or so now, which ain’t half bad either! Not that I’ll stop working anyway, but knowing you COULD is very nice.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Absolutely – that feeling that you already have everything you need is incredibly powerful and freeing. Best of luck on FIRE by 40!
    Luke Beck Rental Property Investor from Green Bay, WI
    Replied 10 months ago
    Great article! Gave me a lot to think about and showed me some real things I can start to quantify, measure, and track now!
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Glad to hear it was useful Luke!
    Taylor Chiu Real Estate Agent from Salt Lake City, UT
    Replied 10 months ago
    Great post, it always baffles me when people say they need 200k/yr to hit their FI goal (except perhaps if they are in a super HCOL area). Sure, would 200k/yr provide a comfortable life? Defiitely. But is it worth all the extra work to get there? Changing a few habits could make 100k/yr, or even less, fully enjoyable. And you would be able to get there much sooner. That said, I want to get to 200k/yr and beyond, but that’s not to hit FI, that’s just cause I think real estate investing is fun.
    Samuel Pentowski
    Replied 4 days ago
    I believe FI ratio does not represent a COMFORTABLE retirement, merely one that covers the absolute essentials. If one desires to live on ramen and house hack indefinitely then that person can achieve FIRE very quickly, but most would find that unsustainable. I believe FIRE comes in several steps, I have in fact watched a few videos on YouTube which gave me that very idea. 200k/yr would be excellent to have but not required to have FIRE, even in a HCOL area I think.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    So true Taylor, you can live an outstanding life on a small budget and reach FI fast if you want. Too many people get trapped into thinking they need to spend a lot to be happy!
    Brandon Borah from Fishers, IN
    Replied 10 months ago
    Amazing article and well timed! I’m 30 with three rentals and currently house hacking a single family dwelling as you alluded to in your post. Articles like this keep the FIRE alive (pun intended). Thank you for sharing!
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Awesome Brandon, sounds like you’re well on your way to FIRE!
    Brandon Borah from Fishers, IN
    Replied 10 months ago
    Amazing article and well timed! I’m 30 with three rentals and currently house hacking a single family dwelling as you alluded to in your post. Articles like this keep the FIRE alive (pun intended). Thank you for sharing!
    Darryl Bodkin
    Replied 10 months ago
    This blog should be a ‘must read’ for people between 20-34.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Thanks Darryl, much appreciated, and I’m glad it resonated with you!
    AMANDA S. Rental Property Investor from Seattle, WA
    Replied 10 months ago
    Great article. I’m aware of the house hack strategy, but the city I live in doesn’t pencil for this. Duplexes and fourplexes in greater Seattle don’t put you ahead in an owner occ. situation. Apartments and rental homes cost about $2,000/mo. here. A duplex starts at $700,000 + and fourplexes of course are even more. Your mortgage cost for renting one side of the property out puts you in the same monthly cost as it would be to rent in the city. My question is, where are the best cities to invest in multiplexes and have them pencil? Since I have a great job here, I won’t be moving anytime soon, and I would be looking for a building to fully lease out without living in it. Know I would need to account for about 8% or so for someone to manage it locally. Thanks for your suggestions/comments.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Amanda I’d check out Roofstock if I were you, to research turnkey rental properties available for sale across the country. You can filter search results by ROI. But in broad strokes, I’d look at the South and the Midwest.
    Keela Bee from Arlington, Texas
    Replied 10 months ago
    Thanks for this! I ran my numbers they are just ok. I’m 31 and just sold one of my rentals that had appreciated pretty well. I am hungry yet patiently looking for a new deal! I love the house-hacking concept and plan to employ it with my next purchase.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Keela I bet you’re doing better than most! Keep working at financial independence and you’ll see results sooner rather than later.
    Kerry R Harris Specialist from Amherst, NY
    Replied 10 months ago
    This is an amazing article as I am 35 and wanting to reach FIRE by 45. I had been contemplating a duplex for more passive income but I think based on this article the single family may be the better route and gain equity to purchase the duplex later on. This is very inspiring and please keep us updated with more.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Great goal Kerry! Sounds like you’re off to a good start to get there, too.
    Mike White
    Replied 10 months ago
    Great reminder to people who are simply drifting by with no real ambition but to retire by 65 and collect a pension. However i don’t know why the goal should always be to retire & stop working, I believe if we are going to spend the majority of our lives working the goal should be to focus on finding something you love to do.
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Thanks for comment Mike! And as for retirement, financial independence doesn’t have to mean retirement – it can simply mean the freedom to work a low-pay, high-fulfillment job.
    Brad Piehl from Dublin, OH
    Replied 9 months ago
    Another great article. Love having links to other articles to continue thinking and challenging myself to push forward. The easy part is to envision a life living on passive income, doing what you love. It’s the hard work that’s the key. Challenge excepted. FIRE date: 6/8/25
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Thanks Brad! Much appreciated, and good luck on meeting your FIRE target date of 6/8/25!
    Jeffrey Almonte Rental Property Investor from Los Angeles, CA
    Replied 9 months ago
    Great article, I’ve been enjoying a lot of your blog posts!
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Thanks so much for the feedback Jeffrey, and for reading!
    Jacob Compher Real Estate Broker from Asheville, NC
    Replied 2 months ago
    Brian thanks for the advice! I'll be turning 30 in a few months and am doing everything I can now to set myself up for FIRE by 40. Student loans are definitely the biggest encumbrance right now, but manageable. In a decade, I'm going to write a post sharing my success based off these steps. Thanks again!