(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

Book Review: Ikigai

Ikigai CoverThe most recent book I picked up was called Ikigai by Sebastian Marshall. I usually choose books if I think they’ll make me smarter, provide new insight on topics I’ve already considered, motivate me, or introduce me to new perspectives. This book did a little bit of each of those things.

The reviews that I’ve read of this book before purchasing were accurate–the book is a stream of consciousness type writing, and many of the chapters seemed like blog posts lumped together. However, that didn’t turn me off from the book. It was valuable to me even though it wasn’t well-organized and didn’t always flow logically.

It was an extension of the way I like to think. It jumped from one topic to another, but all topics were loosely connected and all fell within my realm of interest.

Read More

Tree House Reading: Money, Finance, and Education

I’ve been on a reading frenzy for the past couple of months. It’s usually about finance and it’s usually quite eye-opening.

This week, I’ve got a couple of great books to recommend.

The 5 Lessons a Millionaire Taught Me

First off is a book called The 5 Lessons a Millionaire Taught Me (about life and wealth). This book was short but it packed a punch. The nuggets of wisdom are the 5 lessons mentioned in the title. They are as follows:

  1. Decide to be wealthy.
  2. Take responsibility for your money. (In other words, know how much you have, where your money comes from and where it goes, and what it is doing.)
  3. Keep a portion of everything you earn. (The power of compound interest is ridiculous. Start saving up a nest egg early.)
  4. Win in the margins. (Create extra income, or further add to your savings.)
  5. Give back.

I enjoyed this book not only because those ideas were so powerful, but also because of this one line that changed my life forever: Freedom and power are better than momentary pleasure. 

Let me unpack that phrase a little for you. Basically, it means that fruitlessly spending money now is actually far less helpful than saving that same money and using it as a means to create freedom in your life. For example, if you buy a pair of $50 jeans, and your rent every month is $300, you can expect that the pair of jeans just cost you 1/6 of your rent payment.

What most people don’t realize is that instead of spending money on material items (usually unnecessary), they can put that money towards buying more time. Fifty bucks not spent means fifty bucks worth of your time that you don’t have to spend working if you don’t want to.

The Education of Millionaires

Another book that I read recently was The Education of Millionaires. In it, Ellsberg unleashes all of his criticisms toward formal education. He gives various examples of young people who made it big without finishing college. In fact, he claims that it’s the drive that these people had, not their ability to obtain a paper credential, that made them indispensable in whatever field they chose to be involved in.

Basically, it’s all about networking, sales/marketing, and learning your craft. Looking for opportunity, and being with an entrepreneurial mindset are the building blocks of being successful and adaptable in this modern day environment of uncertainty.

Hopefully these reviews have been helpful and you decide to pick up one of these books. Let me know if you find them to be as life-changing and interesting as I did!

Balancing Discipline and Fun

Striding into adulthood means that you’re basically in charge of every minute of your day.

Whether you get enough sleep, how fit you are, how much money you’re making, who your friends are, and what you accomplish are all up to you.

This is why balancing the two opposing forces of adult life–discipline and fun–are so crucial during your transitioning years (anywhere from 18 to 30 years old).

Finding the right balance between these two factors can mean that you are the most productive and generally happy version of yourself.

The trick is that you’ve got to discipline yourself enough to meet your goals and make something of yourself, but also to have fun so that you don’t feel as if your life is living itself without you.

Lately I’ve been experiencing an imbalance of discipline vs. fun in relation to my personal finances.

Since I have an irregular income, I can’t plan on having a set amount to spend and save each month. This means that I’ve been trying to save virtually every penny that comes in.

That’s too much discipline and not enough fun.

To overcome my frustrations, I decided to use two effective ideas to balance my finances out again. These steps can also be used in other situations, not just in the field of personal finance.

1. Structure Your Days – Make a game plan. Create a list of actionable items that need to get done, or rules that you will follow. (To lessen my frustrations, I now have money rules and set savings/investing amounts.)

2. But Allow for Flexibility – Follow your plan, but not to the t. Fun stuff always comes up, and great opportunities will pass you by if you don’t learn when to take advantage of them. (I’ve built in a way for me to spend money on not just the necessary, but experiences or items that I find fun.)


I’m now in a happier place with my finances after having found the sweet spot between discipline and fun.

It was a simple solution to a weird and psychologically draining (read: money) problem.

How do you balance these in your life?


Personal Finance Basics

I’ve written for you a compilation of all the knowledge I have of finance and how to make good financial decisions. From various books, blogs, and general life experience, here comes the best set of personal finance options and information I can offer you at this time.


Your spending habits are most likely built in already. You could analyze them, but this takes discipline in order to track your spending for a day, a week, or a month. In the book Your Money or Your Life, Vicki Robin and Joe Dominguez suggest that you track your spending every single day. Forever. They claim that this is the sure path to understanding you and your money.

A finance blogger and author by the name of Ramit Sethi argues that tracking your money takes too much willpower, and that doing this will only break your resolve to understand your own spending habits since you’ll be focusing too hard on the minutia instead of actually cutting your spending on things that matter. Here’s a sample from one of his posts:

But by reducing the number of things to focus on — and picking major, important items — you don’t need to worry about that one-off latte or extra $20 you spent on shoes. If you’re handling your major goals, the minor details fall out of that.

Overall, I think that the best strategy so far would be to focus on the big wins like Ramit encourages us to do, while still checking in with your spending habits to be sure that your big wins are still big expenditures in your life.

If your spending changes, as it most likely will a few years down the road, you’ll need to make adjustments accordingly and start cutting back money where it matters instead of where you’ve gotten used to cutting back money.

What if you spend a little on a lot?

If this is the case, then Ramit’s suggestion to spend less on the big wins won’t work for you. In this case, you’ll probably need to go through a few weeks where you look at what you’ve spent and where and get a feel for what things just don’t matter.

You may find out that you do have larger categories of spending where you could potentially cut back. The trick is, according to Ramit, not to cut back too quickly. If you cut back too hastily, you’ll most likely give up out of exasperation and never meet your goal.


You can earn money in a few different ways: working, creating a product, or investing the money in something that will give you greater returns. Let’s go through these one by one and look at the pros and cons of each.

  1. Working

    This is the most common route for people to take when they consider the idea of earning money. This can include being employed by someone else, or being self-employed.

    -PROS: This is the easiest way to make money. You trade your time for income. It’s a direct exchange and you know that you’ll be paid.

    -CONS: Most people max out at a reasonable hourly rate and have no hopes of making wild amounts of money from working a stable job. Also, people tend not to diversify their income when they’re working for someone else. This is a dangerous situation if you think about it because a layoff would then mean something critically unfortunate.

  2. Creating a product

    This option is a little more scalable than working, as you can potentially grow your sales to a significant number of people, therefore not putting a cap on what you can earn in your waking hours.

    -PROS: Larger possibility for growth, and therefore more income.

    -CONS: Harder to get started. Might end up investing a lot of time without good return if product doesn’t sell.

  3. Investing

    When it comes to investing money, lots of people (young and old) feel they don’t have enough information to decide what to invest in. If you’re a young person (20s and 30s), a book that I intensely recommend you read is I Will Teach You to be Rich by Ramit Sethi. It settled all of my fears, and changed my financial life forever. And the book isn’t just about investing. It covers all aspects of personal finance and basically highlights the importance of starting early.

    -PROS: If you put your money in the right places, you’ll be able to let your money grow with very little work on your behalf.

    -CONS: Investing aggressively could lead to large losses. Investing too safely is a waste of your money’s potential. You must invest in the right things in order to make good returns.

Either way, diversifying your income is just as important as diversifying your investment portfolio. If you find that you’re at a place where you rely solely on one income source, then you should consider finding other ways of making side income so that you’re prepared for any sudden loss of an income source. Plus, it’s also fun to see if you can challenge yourself to make more money in cool new ways.

I’m currently working a work-study job with my university, freelance babysitting, and working on a few other ventures such as this blog and helping a friend with her Etsy sales to see if they’ll prove fruitful. I hope they will, but if not I can always move on and I won’t incur a great loss because I didn’t invest all of my time in one potential revenue source.


Saving is the first thing that I do when I get my paycheck. It’s my default activity. Fortunately, it comes very natural to me to want to save a large portion of my money.

Sometimes I still have cravings to spend rather than save but it probably has to do with this consumer society. There’s no sense in dwelling on what can’t be changed, so instead of whining about consumerism, I like to address instead what I can do to help myself save before I spend.

Here’s what I did to optimize my balance of saving and spending:

  1. Calculated average earnings

    I figured out my average monthly income and used this as a basis for the rest of my calculations.

  2. Subtracted recurring fixed costs

    I calculated all of the costs that I pay for on a regular basis such as rent, groceries, gifts, and books and subtracted this from my monthly income. I also tacked on some extra for unexpected expenses.

  3. Established a minimum monthly savings goal

    I either save or spend the money that I have left over. I choose to save first. I created some minimum savings goals for myself each month towards future expenses such as a vacation, my wedding, and a house. I create a sub-savings account with ING Direct for every new savings goal that I create.

  4. Freely spent remaining money

    Once my savings goals are met, I can spend the rest on whatever I’d like. At this point though, I still consciously think about whether or not I need the item in question.

  5. Actively saved extra money

    If I find myself with any extra money at the end of the month, I like to actively put that money towards my savings goals, because I feel like I’m making progress. Also, this forces me not to spend all of my extra money just because it’s there.


Start a retirement account today if you haven’t already done so. I have a Roth IRA with Vanguard. You can too. If you haven’t yet learned about the power of compounding, I suggest you take a quick moment and learn about it. It can very well increase your chances of becoming wealthy.

Creating a more informed future generation

I think that in order to really do this, we need financial transparency.

However, when dealing with relatives or friends in your life, it’s often hard to bring up questions of finance, especially if your relationship usually doesn’t include these types of open discussions. Some people believe that financial matters are a private thing, not to be discussed with others. Other times, there are taboo topics such as bankruptcy that are going on in the background. Probing questions after a situation like this aren’t usually welcomed.

But finance books and blogs aren’t like this. They’re basically a window into the financial soul of the authors, and will let you truthfully gauge how well you’re managing your money, and what you can do to make your situation better. There’s definitely a blogger with a financial style that jives with you. The most important thing to do is to seek them out.

A few websites that I’ve read and enjoyed are:

Why financial self-education is so important

I’ve already discussed how it’s difficult to gain financial transparency with those around you, either due to privacy issues or general embarrassment as to the state of their financial system. Now I ‘d like to discuss why you should read more about finance.

It’s quite simple: when you learn about finance, you can make your money work for you.

After taking steps to learn about personal finance, I’ve become more informed than I ever hoped I’d be at this age. I’m honestly happy as to how I’ve diversified my income/investments, and set up my accounts.

I’m proud to say that I’m on my way to a healthy financial future.

Are you?

If not, what can you do about it?


The picture for this post is the Banco Central del Ecuador. I took this picture on my study abroad trip to Ecuador and I became really excited when I realized that a picture of an Ecuadorian bank fit well within the content of the post.