Retiring early is a relatively simple problem to solve in theory. Just save 25x your annual spending and you will have accomplished this goal. Easier said than done.
The same can be said about other challenges in life such as losing weight or trying to live a happier life. Here are some techniques I have utilized to accelerate my pace to be able to retire early.
Minimize Debt
Other than my mortgage, I don’t have any other type of debt. No credit card debit, student loans, personal loans, or car loans.
I really tried to simplify my life and plow all my savings into money generating assets. There is simply no way around this if I wanted to retire early.
I always tell my children: It takes money to make money!
The only type of loans I see as acceptable is a mortgage and student loans (within reason). The mortgage will provide a place for me to live in without worry about rent inflation. I would only take on more student loans if it allowed me to get a better job. Otherwise, I have stayed away from any type of consumer debt.
Automate Retirement Savings
It wasn't my massive paycheck or stock picking ability that got me to where I am at right now. Rather, I attribute the majority of my retirement savings to me automating the saving process.
This means I don't have to do anything to move money into my 401k, HSA, or Roth account. This money is automatically withdrawn as soon as I am paid on a bimonthly basis.
With this method, I don't have to try to time the market (which is not something I would do anyways) or possibly forget to make the transfer.
With this simple method, I am able to save $33,800 per year in tax advantaged accounts in 2022.
Doing some quick calculations, if I can live on $16,900/year in retirement, I would just need to max out my tax advantaged accounts ($33,800/year) for about 17 years, then I can retire.
This shows the amazing power of automation. No thinking or stress involved.
I know that I can not control the market or the returns so I try not to even think about it. I know that historically, the stock market has gone up. That’s why I am invested in low cost ETF and mutual funds that track the entire stock market.
Focus on the Big Ticket Items
Housing, transportation, and food were the three areas I tried to focus on because they made up the majority of my budget.
In terms of housing, I decided to buy a house in really bad shape and remodeled it instead of buying a newer house that was move-in ready. I live in a HCOL area and real estate prices are through the roof so I tried to control what I could control
While everyone was buying electric cars, I decided to buy a used Toyota Yaris from Hertz rental car. This car has great gas mileage, super reliable, with low maintenance costs. I am only using this car to get me from point A to point B so I see no need for all the bells and whistles of a Tesla.
Lastly, I cook the majority of my food at home. It’s cheaper, tastier, and a lot more healthy. With the way inflation is, eating out is prohibitively expensive and it’s just time consuming to eat out. By the time it takes me to go out to order some food and pick it up, I could have eaten at home.
Retiring early is actually not that hard of a problem. Do you have any techniques you have employed? Let me know in the comments.
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