These Are The Secrets to Retiring Early, According to People Who Are Actually Living The Dream
There is a new movement getting traction, especially with millennials, in the past years called FIRE (financial independence, retire early). And it’s not hard to see why as more and more people are seeing the benefits of being financially comfortable enough to stop needing to work at an earlier age than what is traditional.
The movement has already produced some inspiring success stories amongst its followers. Here are some practical tips these early retirees have to share for those of dreaming of doing the same.
Two Vital Puzzle Pieces
One of the first things they emphasize is the importance of keeping close tabs of one’s finances. Physician on FIRE blogger Leif Dahleen, who retired at just 43 years old, particularly mentions finding out one’s net worth and knowing their total annual expenditure as the two puzzle pieces that will guide them in achieving financial independence.
After all, reaching a final goal would be impossible without a starting point.
The same advice is given by another young retiree JP Livingston, who reportedly had a nest egg of $2 million when he stopped working at age 28. According to Livingston, tracking one’s net worth also shows people a picture of where opportunities for improving their fortunes lie. In connection with this tip, many early retirees also pay close attention to their spending, noting exactly where their money goes.
After getting an idea of one’s expenditure and habits, it’s then time to see how they can cut costs and drive expenses down. There are many ways to go about the task and numerous aspiring and early retirees have noticeably preferred to live in inexpensive housing.
One of them is writer Tanja Hester, who chose to stay in a small one-bedroom apartment for years despite an increase in her income allowing her to move somewhere else. Schoolteachers Joe and Ali Olson did something similar, as they live in a modest condo located in a relatively affordable neighborhood. Along with decreasing the times they out, this living setup allowed the couple to keep their annual expenses to just $20,000.
Saving and living frugally can only take an aspiring early retiree part of the way. Finding ways to increase one’s earnings will take them to their desired destination faster. This is why members of the FIRE movement also put emphasis on aspiring for jobs that might pay higher or taking on side projects and work for more income. Another good way to earn more is to create passive income streams by creating a monetized blog or website.
Splurging on Experiences
Of course, one doesn’t have to deprive themselves of enjoyable things altogether because of their long-term financial goals at all. But what sets early retirees apart is that they choose to spend their leisure fund on experiences instead of buying things, which just lose their value eventually.
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