(Extremely) Early Retirement

You can find my new obsession in the title of this post. I stumbled upon the concept about two months ago via a blog called Mr. Money Mustache. I found this idea (retiring really early through very achievable means) because I was searching for a better way to live life.

Society dictates that normal American life means that you go to school for a fair number of years, kindergarten through college, then graduate and pop back into yet another system of corporate work for 40 or so years, and at the end of all of that you’re finally able to “retire” and finally do whatever the heck you want.

I originally had a small taste of a different way to live out life. A few years back, Tim Ferris’ concept of mini-retirements surfaced. Tim questions the model of retiring later in life when you’re least able to enjoy your time off, and poses the question—“What happens when you take lots of small retirements throughout your life?”

Others, like Steve Pavlina, shared similar sentiments—they worked hard on things they liked doing and were good at (for Pavlina it was programming games), then they fell into a business model and got popular on the internet and made some money that way. It all seemed too easy for them, and not very practical for the average Joe (or Jane!).

Then, when I came across the extremely early retirement community, something life-altering happened. My research and reading told me that anyone—even the most average of people, could retire very early. It does not matter what your gross salary is, as long as your savings rate is high (50%+), and you invest your money well, you can completely retire in less time than most people currently believe is possible.

The appeal for me is the idea of extremely early retirement. Why not just use your younger years to work really hard, save really hard, buy very little, and come out in 5-15 years done with your ‘accumulation phase’ as the early retirement community calls it? Let time do the work for you. Let your money make money. Ugh, it’s so disgustingly simple I’m not sure why I didn’t see the light sooner.

Before I stumbled upon the early retirement community, I had already had previous obsessions with the minimalist movement, tiny houses, ultralight travel, and a whole community of people who were focused on less consumerism and less environmental impact. This has really helped to set me in the right mindset to believe this is possible—I mean, I legitimately like this stuff. And although I’ve suffered from some lifestyle inflation, it’s not too late for me to turn back since I’m young, healthy, and without dependents.

And that’s exactly what I’ve done. I’ve slashed my expenses back to the bare minimum and I calculate everything in terms of how much money I would need saved up in a nest egg in order to have that item or service just by living off the interest of an investment. For example, if I consider purchasing a subscription to a service like Spotify at $10/month, it sounds reasonable initially. I mean, I’m a professional white-collar worker, working in downtown Seattle. Obviously I can afford such a luxury. But, am I really willing to if I consider that it will cost me $3,000 in savings to maintain this habit?

Here’s how I make the calculation—if Spotify costs $10/month, I will multiply that by 12 to get the yearly cost. This is $120. I will multiply the yearly cost by 25 to get $3,000. This is the amount I will need to have saved up in my nest egg to fund a Spotify subscription habit. (I am using a 4% safe withdrawal rate calculation). I’ll then ask myself if it’s worth a decent chunk of my life to work to collect $3,000 just so I can have access to Spotify forever. The answer in this case is no, it’s not a worthwhile trade-off for me. My life energy is way too precious to spend on a random expense like that which is not very valuable to me.

I always thought being able to do whatever you want with your day required huge sacrifices. Either you would have to return to work every so often just so you could have enough money to pay your bills. Otherwise, you would have to create some kind of business that would generate “passive income.” I thought the only way out of the rat race was to be an entrepreneur. So I focused heavily on that for a couple of years. I started up this blog, had dreams of making money from this baby, and crafted all sorts of business concepts. I read loads of books about businesses, entrepreneurship, psychology, and subscribed to all the top email newsletters from advice-giving gurus.

I was so deep into it that I didn’t realize that the most important factor that I could be controlling at the moment wasn’t the money I could be earning from my (non-existent) business, but rather, the money I should be socking away in savings and investments.

Are you currently at an ideal savings rate for your goals? Have you ever run across the concept of extremely early retirement before?

Here are links to other blogs that have also shaped my perspective on this early retirement deal:

  • Jlcollinsnh – awesome concrete investment advice (essentially, stick to Vanguard with their low expense ratios, and invest in mostly a total stock index fund that matches the market, with perhaps some bonds and REITs thrown in there).
  • Mad Fientist – wonderful podcast that features lots of faces from the early retirement community; great retirement calculator tool that he programmed
  • Afford Anything – I love seeing women in the space–I feel like women in the personal development/entrepreneurship/minimalism space are extremely underrepresented; she has great insight on how she is on a path to wealth by investing in multiple instances of real estate
  • Brave New Life – lots of interesting philosophy about what it means to work, live, and retire, and taking back time for yourself; kind of reminds me of the book Brave New World in a way…
  • Lacking Ambition – great posts about living with very very little and learning to love it
  • Early Retirement Extreme – one of the blogs that really popularized the notion; he really takes things to the extreme by living off of a trivial amount of about $7k per year or something awesome like that; on minimizing the need for being “on the grid” and plugged into society

The Secret to Developing Any Skill

pull-upThere’s one thing that I’ve noticed separates those who fail and those who succeed in every new skill that I’ve tried to master–whether it be learning a new language, doing a pull-up, or even completing a challenging project at work.

What separates those who break through to the next level and those who try and fail is that the successful ones are willing to undergo discomfort.

I was in a yoga class a few months ago, and during one particularly difficult stretch, the instructor said “feel the discomfort, feel the pain, and be okay with it.”

Read More

Achieving Lofty Goals While in a Long-Term Relationship

photoMany of the most accomplished people I know or idolize are not in long-term relationships. Perhaps this is just coincidence, but I actually think that there’s a reason that people who are not in relationships accomplish so much.

Why Single People Might Accomplish More

First of all, single people have more time on their hands. They dedicate less time to a partnership, meaning that they have more free time. They are also able to make decisions more quickly because they don’t necessarily need to take into account another person’s opinion or plan their life decisions around another person.

I find that when I am invested in a relationship, I tend to follow a pattern of less personal accomplishment. For example, if I have a goal of writing or programming or just doing something that could further my skillset or body of work, I don’t always get to it.

I would definitely say it is my choice, and that I defer my personal goals for later so I can enjoy spending time with my significant other in the present. I would conclude that it’s psychologically harder to commit to achieving personal goals you’ve set for yourself if you’re invested in a relationship. This is because you’re dedicated to making the other person happy, showing your appreciation for them by focusing at least some of your energy on interacting with them on a daily basis.

Each person or project you commit to absolutely adds to your list of responsibilities, and takes up extra mental RAM. That’s not to say that being in a long and satisfying relationship isn’t worth it, but just that you should be aware that it is indeed another commitment you’re responsible for. Maintaining a healthy relationship is no easy task–it involves regular input, much like tuning up a car to keep it running smoothly and free of any problems down the road. You invest in what you have now, and it pays off later.

When Relationships Help You Achieve Goals

I do believe that relationships can definitely add to your ability to accomplish your goals in a variety of instances. For example–a partner can provide positive support when times are tough, or you’re having a bad day. They can steer you in the right direction if you veer off course.

There are some people who are in relationships and also get a great deal of their own stuff done. I would guess that these people have an understanding of what their relationship means to them and what their priorities are. Either that, or they’ve been together for a long time and just understand that giving each other their own private space and time to think is essential to leading satisfied lives together.

Foster Your Relationship to Grow With Your Goals

If you’re currently in a relationship and don’t feel that you’re achieving your highest potential, the solution could be to discuss this with your partner. By building a mutual understanding of the specific priorities that you have, and blocking off personal time for you to do what you most want to. I’m still working on finding the right balance for this between my partner and I, but I think that identifying and surfacing the issue are great first steps.

Getting on the same page as your partner.

Prioritize your goals with your partner and let them know what you’d like to accomplish and what your most important goals are.

Block off bits of time just for yourself.

It’s easy to get into a rut where you’re constantly spending time with your significant other and you barely have a chance to get a breather yourself. But it’s absolutely necessary if you want to accomplish your own independent projects to block off some time for you to work on them.

Don’t feel guilty.

Your significant other will respect you and probably feel relieved to know that you also want some time for yourself and to work independently on items that are important to you. This will free them up to also pursue things that make them happy and aren’t directly tied to you. Having time to pursue your own passions is absolutely essential for a healthy relationship.