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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