10 Tips - Financial Independence / The Good Life
by Mark Gallagher

Note, I am not a financial planner.  I am sharing some ideas based on my experience. This advice is offered for free and there is nothing for sale here, no advertising and no sponsorships - just my views that you may consider, accept or reject as you like. 

E-Mail: mark@gallagher.com

1. Keep your life as simple as possible.

How do you do that ?   Take a lot of time on the big decisions - who you marry, buying a house, and where you work.  The biggest obstacles to the good life are complications from divorce, a house you can't sell or a job you hate.   The #1 decision in your life is who you marry. Related Tip - How to avoid the complication of divorce.

2. Learning what is most valuable.  What brings happiness?

Most people don't learn this one until they are 65 years old. If you figure this out when you are 30, the good life is guaranteed.

Ok, this is it - the most valuable and enjoyable things in life are your health, time with family and friends, and a job that you enjoy.  Buying expensive things brings less and less satisfaction. Buying an expensive car, vacation home, or latest large-screen TV will bring fleeting moments of happiness. Skip the expensive stuff when you are young, build your savings, and later in life you will have the financial freedom to spend time with your friends and family and a job you enjoy.

Related point  > > >  keep your life and your possessions in balance.   Here is how you do it ...

Every time you acquire something new, take the time to give something away.  Buy a new car, think about selling your old car (at a below market price) to a relative or neighbor that needs a good used car at a low price.  Buy a new TV or computer, donate your old one to Goodwill.

3. Buying a home.

One of your biggest decisions.  Take a lot of time.  Never rush.

During the period 2008 - 2011, home values have fallen 30 percent or more in many markets. There is no clear sign home values will go up soon.  Yes, mortgage rates are at super-attractive levels and prices are low, so this is good time to buy, but rates will probably stay low well into 2012 and home values may stay low, so no hurry.  Look for a great deal on a nice home selling at a fair price in the best neighborhood. Resist the temptation to "move-up" for more space you may not need.  If you like your neighbors, stay where you are, keep your house in good shape,  and pay down your mortgage early.  No better feeling than being about 50 years old and you still love your house and your neighborhood and no mortgage payment. Woot!!

Take a lot of time.  Look at a lot of houses and when you narrow it down to one house, walk around the neighborhood on a Saturday morning before you make any decision.  

4. Buying a car.

Buy a new Honda Accord or Toyota Camry, take care of it, and own it for at least 8 years.  Never lease a car.

If you need a second car, buy a new Honda Civic or Toyota Corolla and keep it for 10 years.

(2011 update - I  currently own a 2000 Honda Accord and 2006 Honda Accord. Both are serviced regularly by the Honda dealer and both run like a top. The 2000 is eleven years old, but is running so well, I  plan to keep it for several more years. I have enjoyed no car payments for many, many years .... sweet!).

5. Vacation home.

Never buy a vacation home, but spend money on nice vacations each year.   Never buy a time-share of any kind.

Related point - hobbies and sports - take an interest in the low-cost hobbies


Low-Cost Hobbies / Sports

- Tennis
- Hiking
- Biking
- Gardening

Expensive Hobbies / Sports

- Golf
- Skiing
- Sports Cars
- Collecting jewelry


6. Monthly Services - cell phones, cable TV, internet access, lawn service.

Never, I repeat never, buy anything from a phone solicitation, someone that knocks at your door, a TV infomercial or a street salesman when on vacation.  Be careful buying anything with a monthly service fee. Sweat the details to keep these costs as low as possible.  Never sign long term contracts.

7. Debt.

You should never carry a balance on a credit card when you are over 30 years old.

You should have no debt (other than the mortgage on your house) by the time you are 40 years old.

You should have no debt (owe nothing on your mortgage, no car payments) when you are 50 years old.

Related Point - - Cost of Sending Kids to College - It may not be realistic to pay for college and be debt-free by the time you are 50.  So if you have big college costs in your late 40's or 50's you should try to be free of all debt by the age of 60.  But, the most important thing about paying for college is selecting the college for your children. You can't let your kids decide where they want to go.  If you let the kids decide, you may compromise your financial security for your retirement.  The parents must select the school they can afford.  This is a huge financial decision. Also, attending a community college the first two years of college and a state university for the junior and senior years results in huge savings for the cost of a good college education. 

8. Save, save, save.

Save a lot of money in your 30's and 40's.  Invest your savings in low-cost stock index mutual funds (about 50 percent) and in US Government bonds / agency bonds or high quality tax-exempt bonds (50 percent).

At about age 50, shift about 80 percent of your savings into safe,  income producing bonds including US Treasuries, US agency bonds (ex., GNMA),  quality municipal bond funds and investment-grade  corporate bond funds.

I suggest the no-load and low-fee bond funds of Vanguard and Fidelity. Vanguard funds I like are: GNMA (VFIIX),  Long-Term Investment Grade (VWESX) and Fidelity funds: Municipal Income Fund ( FHIGX) and Strategic Income (FSICX).  When I buy US Treasuries, I buy "new issue" bonds directly though my brokerage firm and they charge no fee.  Note, the bonds and bond funds I buy are intended to be held for a long time.  I don't trade them or sell them.  These funds produce good monthly income to support your retirement years.

9. Job downshifting / Fun upshifting.

Now you are in your early 50's, you have no debt, you have a large nest egg that generates good interest income, and you have a lot of flexibility.

Find that job that you really enjoy - something low-pressure and rewarding.

Spend more time with your family and friends.   Pick up tennis or swimming.

Continue to work at this fun job into your early 60's.  Retire if you like and continue to live off the interest generated from your nest egg of income producing bonds.

10. How To Avoid the Complications of Divorce

1. Don't rush any decision. Have a long engagement period (at least one year).  Many people have a "dating personality" and a "real personality".  You need enough time to get to know the "real personality".

2. Related to #1, the real personality is exposed by how someone reacts to something that goes wrong when interacting with a stranger (waiter in a restaurant or driver on the road).  If someone is nice to you, but rude to a waiter....  you will be treated like the waiter after you are married.

Reader Feedback:

Amen brother, there is some good advice here.  Nice site in general.  I am a 46 year old tech worker.  Got my pilots license in high school.  Only thing that taught me any discipline.  My version of the #1 rule is: Pay attention to details proportionally with the amount of money involved (e.g pay more attention to buying a house than a stereo system). On #4 I would suggest a civic or corolla, more inline with current gas prices but maybe not as safe.  Can't argue too much with the other guidelines although some people need to stick their neck out a little more on their investments.  Very good.  Thanks for putting this together.

October, 2005

Read your comments on a 'Good life'. Really thoughtful and informative points.
Keep up the good work and enjoy life.

September 2005

Hi Mark,
What a great site! I've just paid off my C/C bal as a result!
Just wish I'd read No.10 a few years ago though!
The main reason for writing is to thank you for listing `An Irish Funeral Prayer` which I'll use at my Mother's funeral on Monday.
With best wishes from Scotland,
August, 2005

How Idealistic!! If this has been your life, you are a very lucky and unusual person.

August, 2005

First, your webpage is a great collection of eclectic and entertaining
stuff.  As far as your financial tips go, you are 100% RIGHT.  I'm 32 years
old and, aside from an occasional DVD, pair of shoes, or sweater, I don't
really spend money on myself.  And I like it that way.  Saving...that's true
fun.  Cars depreciate; gadgets lose their appeal; fancy clothes get soiled
or go out of style.  Investment accounts grow, and make you more powerful
and secure.  A lot of my friends make a lot of money, spend it all, and then
complain about having no money when there's an emergency (or their jaws drop
in envy when I tell them how much I have saved).

January, 2006


I agree with almost everything in your Tips to Financial Independence link:  Marry the right person; get a job you enjoy; be frugal; buy Japanese cars; enjoy the simple pleasures and shun asinine materialism. 

However, aren’t you advocating too high of a percentage of assets -- 60% -- in fixed income?  I know one should shift more toward bonds with age, but I’m 33 years old – isn’t the rule of thumb “own your age in bonds”?  Right now, 70% of my money is in the stock market (albeit in a sensible array of foreign and domestic low-cost index funds) and everything I read says this where young people need to be to benefit from compounding you can only get in equities markets. 

You’re making me nervous…..should I really have 50 to 60% of my money in government bonds at my age? 

April, 2006

Response to Ian by Mark Gallagher

Hi Ian,  Thanks for the note.

Yes, I am way on the conservative side regarding asset allocation.  At your age, most financial advisors would recommend exactly what you are doing - putting 70 percent into several, good equity funds.  So you are fine at your age.

I may change my recommendations on asset allocation on my web page, 60 percent in bonds in your 30's is probably too much in bonds.
But something to consider ....
Most money managers or financial planners know nothing about bonds, don't make commissions on bonds and therefore seldom recommend bonds to investors for retirement savings.
My views on bonds are different from most financial advisors.  Most money managers look at risk in terms of changes to the market value of you investments.  To me that makes sense for stocks, but not for bonds.  I primarily buy treasury and agency bonds.  The actual individual bonds and not funds.  If you hold these bonds to maturity you get back exactly what you expect - the interest payments twice a year and your principal at maturity.  In this case there is no market risk.  You don't care if you buy a 10-year  treasury and 5 years later your statement shows the market value of the bond went down because you are holding to maturity and at the end of the 10 years you are paid back the principal.
My retirement strategy is to build a nest egg of bonds that kicks off enough interest to supplement my income as I downshift into a fun and lower paying job and is like an annuity of regular income when I retire. But I'm also in my early 50's and you are much younger.
I just bought some 25 year Federal Home Loan Bank (AAA rated agency bonds) with a coupon and yield of 6 percent in my IRA account.  Over the next 25 years stocks may outperform 6 percent, but I bet not by much and there is a real risk stocks perform much worse than this.
So keep the 70 percent in stocks but research individual bonds as you get older.  When rates go up (as they are now) consider adding some individual bonds to your savings.  I also own some bond funds but most of my nest egg is in individual bonds.  I have an account with major brokerage firm and they let me buy new issue treasuries and agency bonds with no commissions..........as in zero.
I think it's nuts that many financial planners tell retirees to keep 50 percent or more in equities because they need the higher returns on equities to offset inflation, blah, blah.  If you look at any 20 or 30 year window of retirement, there is a reasonable chance for a major decline in the equity markets.  If that happens during your window of retirement, you have very few options - you may be too old to go back to work, you are selling stocks that have declined in value to pay your bills and you don't sleep at night. That's real risk.
That's my thinking.  I appreciate your feedback.
Mark Gallagher


Thank you, I really liked your 10 tips.. You really hit the nail on the head. I was an obsessed spender a year ago to keep up with the competition.. I thought I could keep up with all the technology and current next Gen video games and movies; It turns out that my 15 IPAQS, 60 Computer Games, 45 Pairs of Pants, and two plasma screen High Def TV's, and 45 DVD collections brought me straight down to debt.  That compulsive buying really adds up, and I was not able to keep up with paying my rent.. I was dumb and regret spending too much when I really didn't need that stuff.
After reading your site, you've helped me control my spending addiction... Thank you Mark.


June 2006

Hi Mark

I have done almost everything you said. My testimony... it works for me.  I am 63, stopped working for a salary and very happy as a volunteer for my Church.  I am sending your advice to my good friends.
Thanks for sharing.

December 2006

Mark, One question...so if you follow this plan, when you are 40 or 50 and your kids are in college, you still should have no debt, mortgage is about to be paid off, and tuition is covered?  I like the ideas you have, I really do.  But I think it's not as realistic as it could be.  It's perfect for people who have no intention of having children.


March 12, 2007

Response to Ian by Mark Gallagher

True.  college is a big expense.  Having to save for college and pay down your mortgage in your 30s and 40s is not easy and may not be realistic for most.

But many parents have choices during this time, and some choose to move up to a bigger house (and bigger mortgage) they really don't need, some let their kids decide where they want to go to college and the kids pick very expensive private schools, some buy a Lexis every 3 years and not a Honda Accord (and keep it for 8 years).    So most of the ideas apply to a family with children.  Maybe it's more realistic to set the date for no debt when you are 60 if you have kids.

See Greg's note below about paying for college and selecting a low-cost method of a good college education (two years at a community college and the last two years at a state university).

But you are right, it's not as easy with kids. Thanks for the feedback.  Mark

Great stuff! I am currently in the process of reorganizing my life along these lines when I read this--downsizing the house and moving out a bit to a smaller house and retire the mortgage, etc.

I don't have a problem with your ideas on helping kids in school and I'd take it further. I rebel at this idea that I owe my kids an education scott free. Help, sure, but my kids will stand on their own two feet. My parents provided a free place to live (home) and a free used car to use (insurance/gas). Tuition and books were my problem. Fair enough. I'm 41 and my state university education has served me very well. I graduated flat broke but with 0 debt. Since I was paying the tab there was never a discussion of whether my parents liked what I was studying. And what's wrong with 2 years at community college to save cash and get the basic courses covered? Nothing!

I'm very excited, looking forward to having my scaled-down life be supportable by my return on assets (invested about like you're talking about) vs. my income. I work in the very bumpy tech industry and get hit with unemployment or job changes from time to time. So won't it be cool if ever I came home and told my wife "Hey honey, the company got bought and I lost my job today" and her response was "That's nice", because ultimately that loss of income was an inconvenient nuisance not a life-killer?

It's positively energizing. I'm also of a mind that these sellers of 401K plans are crooks. Why should I defer such a big chunk of cash until I'm old when I can nearly "retire" (work at what I love not what I feel I must do) now? Not to mention the high fees they get on my money. The only reason for a 401K is to get the employer matching, otherwise its bunk.

Greg  (Feb. 2008)

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E-Mail: mark@gallagher.com


Mark Gallagher, Updated: September, 2011

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