This is a BIG IDEA. An idea so big it could CHANGE YOUR LIFE.
Big idea part 1: If you spend considerably less than you earn and invest the rest, you can retire early and live off the investment income.
Big idea part 2: The lower your expenses, the sooner you can retire, because you a) save more each year and b) you need less money invested to produce what you need in retirement.
I’ve been a long time believer in only working for the number of days a week and the number of years that you have to and no more, partly because I hated my ‘proper job’. I always had a vague aspiration to keep our outgoings low so both hubby and I could afford to work part time and live in the now rather than waiting for retirement. For this reason and because we both had reasonably frugal upbringings, hubby and I have always spent a lot less than we earned. And then we came across the Mr Money Mustache blog, where we learned about extreme early retirement, a bit of a movement worldwide.
In short, hubby and I joined the cult, converted to the Mustachian faith and concentrated on lowering our expenses even more. I think one of the appealing aspects of the movement is that its key purpose is to fight against mindless consumerism and wastefulness. Early retirement is just a happy consequence to a sustainable lifestyle. And you get to do lots of swearing, which is always nice.
The Mustachian ideal is to save and invest 75% of your income, which according to some basic maths, allows you to retire in 7 years time, on average. I can’t say we are able to do that well, but we got enough invested and our expenses sufficiently lowered that I was able to say fuck you and walk out of my ‘proper job’ in July 2013. Hubby joins me in December.
Groceries form the biggest line item on our household budget at about $120 a week or more or $6,000 a year. So I figure if I can get us down to $100 or less a week we’ll save over $1,000 a year. The less we spend, the less we need to earn, the less we need to work. The less we need to work, the more time we can spend doing fun stuff, simple as that.
Join the cult!
PS Also worth a look is an Australian blog called Wealthy Winters which applies Extreme Early Retirement ideas to the Australian context. Mrs Winters aims to retire by 50 and you can follow her on her journey. Even more Australian frugalism can be found at Down To Earth.