diff --git a/src/cfengine_cli/paths.py b/src/cfengine_cli/paths.py
index 018bd64..be3e54f 100644
--- a/src/cfengine_cli/paths.py
+++ b/src/cfengine_cli/paths.py
@@ -4,12 +4,12 @@
 from cf_remote.paths import path_append
 
 
-def cfengine_dir(subdir=None):
+def cfengine_cache_dir(subdir=None):
     """
-    Returns the directory used by the Python tools for temporary files,
-    global config, downloads, etc.
+    Returns the directory used by the Python tools for temporary
+    files, downloads, etc.
 
-    Defaults to ~/.cfengine/, but can be overridden via the CFENGINE_DIR
+    Defaults to ~/.cache/cfengine/, but can be overridden via the CFENGINE_DIR
     environment variable.
     """
     override_dir = os.getenv("CFENGINE_DIR")
@@ -27,7 +27,32 @@ def cfengine_dir(subdir=None):
 
         return path_append(override_dir, subdir)
 
-    return path_append("~/.cfengine/", subdir)
+    return path_append("~/.cache/cfengine/", subdir)
+
+
+def cfengine_config_dir(subdir=None):
+    """
+    Returns the directory used by the Python tools for config/persistent files.
+
+    Defaults to ~/.config/cfengine/, but can be overridden via the CFENGINE_DIR
+    environment variable.
+    """
+    override_dir = os.getenv("CFENGINE_DIR")
+
+    if override_dir:
+        override_dir = os.path.normpath(override_dir)
+        parent = os.path.dirname(override_dir)
+
+        if not os.path.exists(parent):
+            raise UserError(
+                "'{}' doesn't exist. Make sure this path is correct and exists.".format(
+                    parent
+                )
+            )
+
+        return path_append(override_dir, subdir)
+
+    return path_append("~/.config/cfengine/", subdir)
 
 
 def bin(component: str) -> str:
diff --git a/tests/unit/test_paths.py b/tests/unit/test_paths.py
index 00e4ce4..1d63df6 100644
--- a/tests/unit/test_paths.py
+++ b/tests/unit/test_paths.py
@@ -1,15 +1,28 @@
 import os
-from cfengine_cli.paths import cfengine_dir, bin
 
+from cfengine_cli.paths import cfengine_config_dir, cfengine_cache_dir, bin
 
-def test_cfengine_dir():
-    a = os.path.abspath(os.path.expanduser(cfengine_dir()))
-    b = os.path.abspath(os.path.expanduser("~/.cfengine"))
+
+def test_cfengine_cache_dir():
+    a = os.path.abspath(os.path.expanduser(cfengine_cache_dir()))
+    b = os.path.abspath(os.path.expanduser("~/.cache/cfengine"))
+
+    assert a == b
+
+    a = os.path.abspath(os.path.expanduser(cfengine_cache_dir("subdir")))
+    b = os.path.abspath(os.path.expanduser("~/.cache/cfengine/subdir"))
+
+    assert a == b
+
+
+def test_cfengine_conf_dir():
+    a = os.path.abspath(os.path.expanduser(cfengine_config_dir()))
+    b = os.path.abspath(os.path.expanduser("~/.config/cfengine"))
 
     assert a == b
 
-    a = os.path.abspath(os.path.expanduser(cfengine_dir("subdir")))
-    b = os.path.abspath(os.path.expanduser("~/.cfengine/subdir"))
+    a = os.path.abspath(os.path.expanduser(cfengine_config_dir("subdir")))
+    b = os.path.abspath(os.path.expanduser("~/.config/cfengine/subdir"))
 
     assert a == b