Hello readers, today’s post has been contributed by Amy Nickson (at Working Moms Word) sharing an early retirement success story and tips she learned. Please take a look at her site and provide feedback to her posts. She will certainly appreciate the support.
Say Goodbye to 9 to 5 Working Life
There’s nothing better than having enough time to do whatever you want. But, it’s almost impossible unless you’re lucky enough to get billions of dollars from your parents or grandparents. Sometimes the 9 to 5 office life makes you crazy. But, “where there is a will there is a way”. Yes it’s tough but it’s not impossible. You may get ample time to enjoy your life in your own way once you go for “early retirement”. But, you need to be determined and work hard to make it possible.
Here is a success story of Mr. and Mrs. Armstrong who achieved early retirement at the age of 45.
How I met them
A few years back, I had no practical knowledge about personal finances. I wanted to learn more about it. Thus, I started the small financial consultancy. One day, I displayed an advertisement “Share your financial success story and win prizes” on the front door of my consultancy office. My main motive was to learn some practical lessons from real people. One month later Mr. and Mrs. Armstrong knocked my office door.
The couple apologized for being so late as they were out of town. The wonderful looking couple told me that “It’s been 2 years since we retired early. Now our age is 47 and we won financial freedom at the age of 45. We met in college, fallen in love, and then got married”.
Mr. Armstrong was a civil engineer and Mrs. Armstrong was a part-time teacher in a college. They graduated from the same university with zero student loan debt. They dated each other and fell in love. They were very compatible and soon started a live-in relationship.
Their parents helped them to complete their studies without any financial hassles. Mrs. Armstrong got a scholarship due to her good rank and worked as a part-time teacher to meet other expenses. After completion of his studies, Mr. Armstrong got a good job and started earning a good amount of money and Mrs. Armstrong continued her same job.
During that time they had to manage their rent and other costs. So they worked hard and soon bought a house. After 2 years of courtship they got married.
They had a mortgage and other monthly bills. Soon they realized frugal living is the key to saving money. They took baby steps toward extreme frugality. It helped them to pay off the mortgage earlier.
Mr. Armstrong had to travel often for official purposes and Mrs. Armstrong didn’t want him to continue the same job anymore. This is because their busy life became an obstacle between them. Mrs. Armstrong said, “There’s no fun left in our marriage. Absolutely no time for personal life!” Both of them wanted to leave their jobs to enjoy life in their own way.
Thus, they set financial independence as their goal for their life. They were in their early 30s and continued with frugal living.
They hardly visited restaurants, they prioritized to save 75% of their income each month. They said “We optimized each expense so not to break our budget”. Their pretty good income and saving helped to pay off the mortgage and they started saving more money.
They shared more secrets for winning an early retirement at the age of 45
The couple said, “we set our goals first, we analyzed every expense and allocated money for them” and “We followed our monthly budget”. They agreed that maintaining a frugal lifestyle is tough, but it helps to save more money every time. Here are some tips to minimize your working life and maximize your golden age.
Tips to win an early retirement
The couple said you should start soon for winning an early retirement. Because if you start planning for retirement at the age of 40 then it’s already late.
- Make a proper plan
At first, write down your plan to build your financial security for post-retirement life. Remember, you need to take proper action to make your early retirement possible. It won’t happen magically. So make a financial goal and set the age when you want to retire. This way you can focus on your goal and make each and every decision purposefully.
- Prepare a budget
Check your bank statements on a regular basis and put all expenses into a category, like debt repayment, travel expenses, food and household so on. Calculate every month’s average expenditure per category to figure out how you are presently spending your money. Thus, you can track your monthly expenses. After this, deduct the average monthly expenses from your net monthly income. Now look at the amount you have saved and look for other ways in which you might increase that amount.
- Reduce unnecessary expenses
Mr. Armstrong said, people with high paid jobs are still working at their age of 50 because they all are reckless spenders. So, if you want to achieve financial security early, then you should focus on saving, no matter how much is your annual income. So, try to uncover those unnecessary expenditures. You may be surprised to look at the amount you’re spending by going to the movies every week or how frequently you are eating a lavish dinner in an expensive restaurant. There’s no point in living in a bigger house than you need. Try to buy or rent a modest apartment, according to the size of your family. It would be wise on your part to reduce these unnecessary expenses and save for your forthcoming retirement days.
The couple marked some mistakes that can delay your retirement planning
You need to be very clear about your dreams. If you’re planning for early retirement without knowing all the advantages and disadvantages, then it will be your biggest mistake. It is very important to research thoroughly before making any decisions.
- Not re-allocating your excess finances
If you have some extra money, then use the money to get out of debt or other payments (if any). You can also use the amount that you save from your net worth to pay your mortgage. Remember, the more you reduce your expenditures, the quicker you’ll be able to pay off your bills. If your debts are cleared, you’ll be able to save more money for your retirement days.
- Not living in the right place
Mrs. Armstrong suggested that, if you’re living in a big city, then it’s quite normal that even a cup of coffee is much costlier than a smaller town. You should think about relocation if you want to save more money for the future. It’s not possible to maintain a frugal life in an expensive place even if you want. So, it will be a good decision to relocate to a smaller town to stretch your retirement savings.
- Not consulting with a financial planner
A consultant always has some better insight than you. So, if you’re planning for early retirement, then it is advisable to sit with a financial planner to judge if the plan is suitable for you. They might have some tricks that can help you to achieve your dream faster.
Conclusion
The whole discussion was for 3 hours. They won some goodies and I won some real life financial lessons. The couple travels a lot. They rent a portion of their house to earn money. They grow their own veggies in their yard as well. Lastly, they told me “make sure you’re saving a good amount when you’re young. Making wise investment decisions is very important to grow the money as well. Because without adequate financial support, financial independence is not possible”.
Extending my thanks to Amy, this is the Leisure Freak site’s first contributed post.
Author bio- Amy Nickson started the Working Moms Word site in loving memory of her mom – sharing thoughts and opinion to help single parents, child, working moms.