Reaching financial independence requires a combination of good choices and good fortune. Even the best laid plans sometimes go awry, but if you aren’t making smart decisions along the way, it won’t matter.
Recently a post on the early-retirement.org forum asked “what changes/sacrifices did you make to reach financial independence?” In general, the folks responding are a very successful group of early retirees and their responses provide a good case study in how to get there.
Below, I summarized the 25 most common responses (in no particular order) and marked with an [X] the ones that were particularly significant for us …
⁃ Bought used cars, drove them into the ground
⁃ Stayed in our first home, didn’t trade-up to bigger homes
⁃ Went camping instead of trips to Disneyland or Europe
⁃ Bid out car & home insurance every three years
⁃ Cut the cable TV cord, watched over-the-air channels
⁃ Brought brown bag lunch to work versus eating out
⁃ Moved to lower cost rural area & commuted farther
⁃ Earned degree nights & weekends while working [X]
⁃ Used mass transit for commuting [X]
⁃ Stayed with MegaCorp long enough to maximize pension [X]
⁃ Worked overtime / had second job to pay off debt & increase savings
– Clipped coupons and stocked up on everyday items [X]
⁃ Avoided buying luxury & fashion brands
⁃ Had a small / not extravagant wedding [X]
⁃ Owned one car & shared with my spouse [X]
⁃ Did my own home handyman work / painting / repairs [X]
⁃ Movies at home rather than go to the theater
⁃ Use old, “not smart” phone & gadgets
⁃ Drove small / highly fuel-efficient car [X]
⁃ Cooked at home with basics bought in bulk
⁃ Went to school on scholarship or tuition reimbursement [X]
– Worked through college / minimized student debt [X]
⁃ Keep thermostat & water heater turned down
⁃ Avoided expensive hobbies: boats, cabins, RVs, sports cars [X]
⁃ Shopped thrift stores & garage sales for kids clothes & toys
⁃ Paid off debts / avoided using credit cards [X]
As I looked at this list of 25 ideas to reach financial independence, I was surprised I could only check the box on 12 of them. I guess that’s a sign that you don’t have to sacrifice every way to reach FIRE, you just have to live below your means and ensure you are committing to enough of them.
I would also say you don’t have to necessarily commit to them for your whole life. Folks that know us today might be surprised at some of the places I put the [X]s.
As I’ve written in the past, we were very practical with the cars we drove and trips we took for 20+ years until we approached financial independence. In the last 15 years, we’ve now taken wonderful trips and bought luxury cars, including a zippy sports car.
To use one of Dave Ramsey’s favorite lines, the lesson is that if you can “Live like no one else now and you can live like no one else in the future.”
How many of these would you [X]? Which were the major ones? What would you add to the list?
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MrFireStation 
Excellent list! Many an X you have, I have too. I also have an X for used cars used up, and brown bag lunch. The single biggest factor for me was beginning to invest after-tax money in the market beginning in my twenties. That small stake, added to month by month, year after year, decade upon decade has yielded an astonishing (yet anticipated) amount of capital to fuel our retirement years quite nicely.
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In your 20s – that’s really forward thinking! I was definitely a decade behind you. We put a lot of $ in our 401ks right out of college, but the rest of our $ went toward a house down payment. My son, on the other hand, started his Fidelity account at age 19. Even that has grown leaps and bounds over the last 4 years.
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We did many of those items to some smaller degree at various times throughout our lives. I would say only ten really applied to us in a significant way. Like you guys, I think we were able to balance life pretty well by still taking nice vacations along the way, but cutting big costs like driving lower cost vehicles (not so much now that we are retired). One big thing for us (not listed) was building a house at 19 years old, while we were married but still in college. We bought/sold four times during our married life. Each house increased in size and value substantially. We paid each down substantially along the way, and stayed in each just long enough to capitalize on great housing market cycles to capture that built-in equity along the way to the point that by our fourth (now retirement home), we had paid it off fully as soon as it was built at 42/43 years old. Which was the catalyst that allowed us to invest in rental real estate. That first house experience was an enormous impact getting that early jump into real estate. Much like compound interest, our continued rotation of properties became a great driver of wealth.
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That’s sounds a lot like us, Thom – we’ve done pretty good on housing over the years. We’ve been in 4 homes and always did well. We made money on each house and our final mortgage payment was made when I was 44 or 45. If you live in a home long enough and work the cycles, it’s a pretty good appreciating asset.
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I only scored 9 of 25. I certainly didn’t know who the Joneses were so how could I keep up. I did have a company car for three years out of college which helped tremendously. I think the biggest issue was simply living below my means always.
I actually regret having saved on taxes years ago with IRA and 401k money. I am odd in that I have a pension and likely won’t withdraw from tax deferred accounts until the government requires, but I’m at a much higher tax rate now with no mortgage deduction so other than tax deferred earnings on contributions this was a penalty for me. Note Roth wasn’t an option until such time that I stopped saving for retirement. I felt paying down the mortgage was more important.
I know first world problems. I could spend twice or three times what we spend but it wouldn’t feel right. I know I have issues, but we are happy with no worries
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I suppose our 401k contributions would have been better to tax early in our careers than now, too. Our pensions are fixed – no cost of living increase on them – so if we wait to tap them long enough, we’ll maybe be back in a lower tax rate window. We’ll see. As you say, first world problems.
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