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Category: Plan My Retirement

How a Couple Achieved Early Retirement at the Age of 45

early retirement

Last year, I visited Daytona beach in Florida to enjoy spring break. Daytona beach was ideal for spring break and crowded with families to enjoy the sand under the sunny weather. During my second day visit to the sea coast, I met Mr. and Mrs. Wilson.

They were clicking their happy faces with the help of the selfie stick and suddenly asked me about the nearest food stall that charges less. The question struck me to know more about them as they were looking well off but asking for an inexpensive restaurant!

I gave them the direction of the nearest food stall where I ate last time and started talking more about the place. They love to explore new places. Every year, they plan 1 big vacation and 2 small.

They also a worshiper of the frugal life. I asked how can they manage with their work? They replied, “we have no children and it’s been 2 years we achieved financial freedom”.

That made me really surprised since they were looking so young at their mid 40’s. I beg for a short discussion on the topic and the happy couple agreed.

We met at the same beach in the evening. I was excited to know the secret of achieving early retirement at the age of 45.

The Wilson couple started sharing the whole story with me.

Mr. Ryan Wilson was a software engineer and Mrs. Wilson worked as an event manager in a farm. They both passed out from the same University with “zero” student loan debt and started a live-in relationship. They were very compatible and hard working but hate the conventional nine to five jobs from their core of heart.

I asked how can they manage the cost of studies? They replied they both belong from a rich family and their parents helped them to pay for the studies. Mr. Wilson got scholarship due to his good rank and also worked part time to meet other expenses.

After completion of the studies, they got a good job and started earning good amount of money. But, that time they had to spend a big amount of money for rent and other costs.

After two years of working hard, they finally bought a house and tied the knot. They had to pay for the mortgage with other bills. They worked hard to meet every necessity. Mrs. Wilson had to visit, places to place to organize an event. She said, “it became hard to get time for their personal life”. Finally, they decided to retire early.

Their first step was living extreme frugal life to get rid of the hard working life. They wanted to achieve financial freedom at an early age to get out of the conventional office life.

They were just at the age of early 30’s and started living extreme frugal life.

Mrs. Smith told, “we hardly made plans for dinner outside”

Mrs. Smith told “we didn’t have student loan debt, car loan, medical emergencies, only we had to work on the other expenses. We optimized other expenses that typically break our bank.”

How they started the journey

They decided to save as much as possible to pay off mortgage first. As they both earned a pretty good amount of money they can save 71% of their income each month. They easily paid off the mortgage within 6 years and started saving more than 60% of their income each month.

How they embraced the frugal lifestyle

The couple said,

“You have to analyze each expense, from smaller to bigger before spending money”.

“ You have to figure out important expenses and set up a budget

“ Following a frugal lifestyle isn’t a cakewalk, only some good habits can help you to stick to frugality”

They unveil some good financial habits to save more money in the early 30s

The couple said, “twenties is the right time to practice good financial habits. Thus, you’ll be able to save money in your 30s”. If you have a habit of spending more than what you earn from your college life, then it would be difficult for you to manage financial future.

This is one of the major reasons that people incur debt. It is better that you start building new habits to become a money saver.

1. Set up a goal
You should have some reasons to save money. Think what do you want? A home, financial independence, getting rid of your student loan debt. Take your first step and achieve one by one. Your desire will inspire you to save money and thus you can build good money habits as well.

2. Give yourself a deadline
Always fix a date by which you can meet your goal. This will give you a push to save money. Think about your goal once a day. Thus, you can avoid big expenses and stay within your budget.

3. Create a budget and modify accordingly
Budgeting helps you spend less than what you earn. This helps you to save more as well. As you spend less and save more, you incur fewer debts and even if you do incur some, you’ll have the money to pay those off.

You’ll have to make a list of your income and your expenditures to create a budget. A budgeting calculator can help you prepare your budget. If required, you’ll have to analyze and also modify the budget from time to time as per the changes in your income and your expenditures.

4. List items of your requirement
At the beginning of every week, you should list the names of items you would require throughout the week. This list should only include items of necessity and not the luxury.

You should then visit the mall once a week to buy things you’ve written down on that list. You should remember to carry the list with whenever you go shopping.

5. Use cash for shopping as much possible
One of the major reasons why young people get into debts is credit cards. When you have a credit card in your hand, you can barely resist the temptation of buying something that catches your fancy without thinking whether or not you at all need it.

Instead, if you use cash for purchasing, you would not be able to spend much even if you want. This is because you cannot carry too much cash always.

6. Stay within your means
You’ll have to change your style of expenditure to save money. That is, you’ll have to become more disciplined and lower your expenditures as much as possible. In addition, the lower usage of credit cards as these incur higher debts.

7. Make a habit of using coupons
Coupons are a great way of saving money. You can collect coupons from newspapers, magazines and even some websites which allow you to download free coupons. Thus, you can use these coupons to buy items at a discount. Talk to your parents or elderly persons to get some information about coping.

8. Make your own food always
Eating out, ordering food or buying lunch can make your pocket considerably lighter. It is better you skip eating out except for those very rare occasions when you want to go for dinner to a restaurant to celebrate anything. You should also carry a brown paper bag to the office so that you don’t need to buy food.

9. Set up an automatic savings account
Set up an automatic savings account to avoid spending money on something else. You can ask your employer to directly deposit a certain amount of money from your salary into the savings account. Pay yourself before paying others. Once it becomes a habit, you’ll see how fast your money grows.

10. Fight with debt
You should work on your financial obligations as soon as possible. The sooner you pay off your debts, the quicker you can start saving money. Try to pay the high-interest debts first. Try to fix your credit card and student loan debts now.

11. Give priority to your career
Take your job seriously because your profession will give you a smooth financial life at the age of 30. A good job is always a steady source of income. Work hard and acquire advanced skills in order to stay financially secure in the long run.

12. Save money for retirement days
It’s very important to think about retirement days, especially when you’re thinking about early retirement. Retirement means “no work, no salary”. But, if you want to maintain your present lifestyle, then you should save enough money to spend the same lifestyle during the retirement.

You have to analyze your spending and save money accordingly. You should open retirement accounts to grow your money.

13. Make yourself financially educated
Try to learn more about banking, investing, handling finances and so on. Read journals and financial magazines. Read personal finance websites and follow the financial market on TV channels. These all are good habits you can build in your 30s.

Thus, you can discover your own ways to deal with money as well. To invest your money, you have to learn about it. Because a wrong investment can ruin your savings. So, read, learn and consult a good financial advisor before investing your hard earned money.

They rented one portion of their big house to earn some easy money. You have to find out ways to earn money, they suggested. They agreed that “most of the young adults don’t know how to live within their means”.

If you have a couple of credit cards in your hand and indulge into heavy shopping without thinking about future consequences, then you’re in trouble. Once you fall in debt, you’ll realize how difficult it is to get rid of it. It delays financial freedom as well.

retirement fund

13 Biggest Money Mistakes Retirees Make

retirement fund

No retiree can afford to make these financial mistakes.

In the previous article, we discussed the 13 biggest money mistakes people make in different stages of their lives. While debilitating, many people who make major money mistakes before retiring still have time to recover from it, and hopefully save up enough for a passable retirement.

However, the same cannot be said for retirees who are no longer producing income actively. One major mistake can wipe out the entire retirement fund and ruin years of savings, not to mention a terrible quality of life during your golden years.

It’s important not to mess up.

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