What is considered Financial Independence?

[Jason Schmidt]

I was thinking - is financial independence acheived when you have enough property to produce rent that will cover all of your monthly expenses, and then have some to put aside in case something happens. Is this right? For example, lets say you have $4000 a month in expenses and bring in $5000 a month from rentals. Is that considered financial independence? Grounds for retiring if you wanted to?

[Timothy W.]

To me Financial Independence is two major things: 1. Passive income that exceeds my living expenses and 2. Having achieved the next step in wealth building. IMHO, the passive income could be one stream or multiple. That doesn't matter. The point is it's a step.

Even in the cashflow game, you do not win the game by achieving "financial independence". Financial independence is a necessary step to winning the game and really only changes the way you can play. What financial independence says is that your are a sophisticated enough investor to take on larger and more profitable projects that are beyond the scope of the financially dependent.

The key is that these new projects are within your control to choose now.

Tim