What exactly is early retirement as defined by the above bloggers? Well, these bloggers believe that anyone (who is reasonably young) can achieve early retirement through financial focus, thrift, and extreme savings and investing.
What sets these bloggers apart is their extreme focus on all of the little details. They believe that every line item in your budget matters and they put a huge amount of time and energy looking at all of the “small stuff” because they feel that it adds up over time.
Imagine working on your monthly budget and seeing how each financial decision you are a part of makes a difference. The concept isn’t new and David Bach of the Automatic Millionaire alludes to it via the Latte Factor. He posits that if you manage some of your smaller recurring expenses by eliminating them as much as possible that saved and invested money will grow over time and serve you well in other ways.
Stop smoking and drinking bottled water
If you’re interested in the possibility of retiring early, spend some time reviewing your budget and spend time discovering savings opportunities. Look for the following potential leaks in your budget:
- A high cell phone bill. Are you paying over $100 a month for your phone service? Look into less expensive phone service providers. It is now pretty easy to find a cell phone plan that is at least half that price, saving you around $600 a year.
- Do you smoke? Stop, it’s both good for your health and for wallet. Cigarettes range in price between $4-$14 a packet. If you smoke one pack a week or four packs a month that ends up costing you between $192-$672 a year. If you smoke more than one pack a week your yearly smoking costs will go up substantially.
- Do you drink delicious and expensive lattes every day? Maybe there’s an opportunity to save money by cutting down on your habit or just downsize the size of your daily coffee.
- Do you enjoy bottled water? Seltzer or plain? Maybe it’s time to invest in a Soda Stream that you purchase on sale and make your own seltzer water.
Do the math
There is an endless list of budget items that you can look at and cut with precision for long-term sustained savings that last over an extended period of time. When you’re looking at your budget items the Frugalwoods and Mr. Money Mustache recommend multiplying the amount that you figured out your line item currently costs you by 12 (months) to get an idea of how much you’re spending yearly on an item.
Being aware of the big picture will help you make choices that would be hard to make without that additional information. Add up all of the items that you would like to save on and you may find yourself in a state of shock at how much money you have to throw at your retirement and other savings related goals.
Michelle Jackson is a personal finance and lifestyle blogger sharing her story at The Shop My Closet Project. Her goal is to help people cultivate their best life. When she’s not blogging or podcasting for Girl Gone Frugal you can find her riding her bike, going for coffee, or hiking in the mountains.