Financial Independence Vs. Wealth Accumulation

I’ve come to the realization that I have 2 clear financial goals: Financial Independence and Wealth Accumulation. These 2 goals, at times, contradict each other and at others overlap. First I would like to lay out the goals of each as I apply them in my life:

Goals of Financial Independence:

• To not have any debt, period.
• Car loans, home loans, student loans, credit car debt, etc. should be avoided when possible and paid off in the fastest plausible scenario imaginable.
• Pay yourself first and save for future quality of life/retirement.

Goals of Wealth Accumulation

• Leveraging investments with debt. I.E. business loans, home loans, student loans.
• Creating revenue streams through your investments.
• Pay yourself first and save for future quality of life/retirement.

As you can infer from the graphic above I believe there is a financial sweet spot in managing both of my goals.

First, I understand that by carrying too much debt I will never be able to accumulate any real wealth. Working a full time job and paying down my mortgage and miscellaneous debt is fine, but it will take me about 10-15 more years if I really tighten my belt. In the mean time I will be passing up opportunities in life having to work for “the man” just to achieve financial independence.

Second, if I want to start a business or get into real estate investing (like I want to do) then there is not enough time left in my lifetime to save for all the costs upfront. Saving say 20% of the upfront cost for a down payment is reasonable while leveraging the rest of the investment with a loan is an acceptable financial risk worth the future wealth reward for me and my family.

As a final thought I will actively try to prevent holding any debt that exceeds the returns on my investments. For example I expect my stock market investments to meet (not beat) the S&P 500 index returns. The expected annual return on that investment is 6%. That means I will never have any outstanding loan that exceeds that 6% threshold if it can be avoided, I do not want to be pulled away from financial independence for the sake of wealth accumulation.