Over the past month or so I’ve done a lot of reading about early retirement. Not retiring at 50 or 55 but even earlier than that. By reducing your spending and being extremely frugal and saving the remainder of your money it is possible to retire quite early. Depending upon your income and expenses it can occur as quickly as in 10 years, which was done by Mr. Money Mustache.
My goal is a little bit longer term but I’ve been working hard to pare down my spending, which is a key part of early retirement. If you reduce your spendings you are increasing savings and reducing the amount of money you’ll be spending in early retirement – which decreases the amount you need to save. This and many other strategies are outlined in a cheap online book called Retiring Sooner I would suggest reading it. The book gathers together an overview of all of the things you need to know about early retirement and sets about a step by step plan to help you. (if you send me your email I can lend you my book for 14 days as soon as I’m done with the book)
This chart was taken from the book and helps explain the importance of saving and reduction of spending by showing how many years you’ll have to work depending upon what percent of your income you are savings.
Savings Rate Years to Retire
The other very important thing the book has suggested is to keep track of your finances with either a quicken type program or a online finance such as Mint. While I haven’t tried out Mint I have been using KMyMoney, which is a free finance software for Ubuntu. Keeping track of your finances in this way is extremely important. It also helped me reduce my already reduced spending and budget myself a certain amount of money for each month in given categories. This type of software is essential for those retiring early, if you get nothing else out of this post download some of this software and start keeping track.
Enjoy your life, reduce your spending and retire early to do what you want to do.