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Working Toward Financial Independence While in Debt


The Financial Independence Retire Early movement (FIRE for short) has become pretty popular over the past few years, and it’s easy to see why. Who wouldn’t want to leave the workforce years early with a comfortable nest egg and spend the rest of their days traveling and pursuing their passions?

Debt and FIRE may seem like they don’t mix. After all, it’s hard to save and invest a large chunk of your income while you’re contending with tens of thousands of dollars worth of debt. For a while, I was discouraged and felt like I’d never achieve FIRE if I wanted to become debt-free. I considered giving up my FIRE goals and just focusing on paying off my mortgage and retiring at 67. 

But you actually need a lot less money than you’d think to achieve certain types of financial independence—more on that later. I’d even argue that people who have the discipline to pay off a significant amount of debt are in a better position to FIRE than the general population. 

Here’s why I think it’s possible to achieve financial independence even if you’re in debt now. I’ll also give you an overview of my FIRE plans as an example. 

Why People Who Have Paid Off Debt Are in a Good Position to FIRE

I think that paying off debt is great training for FIRE because it teaches you how to delay gratification. Those of us who are committed to paying off debt know how to live modestly and work hard toward a goal that often feels far away. We’ve learned how to cut down on discretionary spending and skip eating out and vacations for years at a time to accelerate our financial progress. 

That mindset is a huge asset when it comes to achieving FIRE. Once your debt is paid off, you’ll be able to funnel all the money that used to go toward loans into your investment accounts. If you maintain a high savings rate by living like you’re still in debt, you may be able to achieve FIRE even with a later start. It also helps if you’re able to contribute to your 401K while you’re paying off debt, which is a smart move even if you’re not aiming for early retirement. Investing just a couple hundred dollars a month during your debt payoff journey will shave years off your FIRE date. 

My FIRE Plans

You’ve probably heard of the standard version of FIRE, which involves saving a large percentage of your income (usually 50% or more) to build enough wealth to retire early. But there are actually a few different types of FIRE you may not know about that are easier to achieve. 


Lean FIRE is a type of financial independence that involves living on less than $40,000 per year. If you can get your average annual spending down to $20,000 or $30,000 (or supplement your investments with a part-time job), you can retire with less than $1 million in today’s dollars. 

Coast FIRE

Coast FIRE is even more achievable. People who have reached Coast FIRE have invested enough money in their 401K to retire at regular retirement age without making any further contributions. This means that they only have to cover their living expenses until age 67, which gives them a lot more career flexibility and ability to take risks. 

This is the type of FIRE that I’m currently aiming for because it’s easier to balance with my debt payoff goals. Trying to save 50% of my income and pay off my mortgage at the same time just isn’t realistic. But to achieve Coast FIRE in my late thirties or early forties, I only need to invest about $550 per month, which is completely doable even while paying off my mortgage. If you want to figure out how much you need to invest each month to achieve Coast FIRE, play around with this awesome calculator

Based on my early mortgage payoff schedule, I’ll be debt-free around the same time I achieve Coast FIRE. Getting rid of my mortgage will lower my expenses significantly. Because I won’t need a lot of income to cover my living costs, I’ll have a lot more financial freedom and career flexibility in my forties if everything goes to plan. 

FIRE Is Still Possible

If you have early retirement dreams, you don’t have to give up on them just because you started life with student loans or got into credit card debt. I encourage you to play around with some FIRE calculators and see what might be possible if you save diligently once you get out of debt! 

Do you want to retire early? If so, what kind of FIRE are you aiming for? Let me know in the comments section below!

Read More

Elective Medical Procedures While in Debt

A New Mortgage Payoff Strategy

Why I’ve Relaxed My Debt Payoff


  • Reply Anon Lawyer |

    I don’t see how paying off a mortgage is in any way at odds with saving for FIRE. A lot of what you pay towards your mortgage is equity, not interest, and you need to live somewhere in retirement. If you have a paid-off mortgage you don’t have to pay rent and that decreases your living expenses significantly. In general, framing mortgages as debt equivalent to a credit card payment doesn’t make a lot of sense.

  • Reply Meg |

    I don’t mind working until normal retirement age, but I would like to get the house paid off so that I don’t have to work in the job I’m currently in. I’m very burnt and work/life balance is a joke. I feel like if I”m mortgage free, I’d be able to take a lower paying but much less stressful job. I know mathematically, I should invest that money instead of paying off early, but….I know I’d be more mentally at peace with just the taxes to worry about.

So, what do you think ?