Early Retirement: Myth or Reality?

WRONG! Fact is, you’re spending over 3300 every month, now that’s too much! The real challenge for you is to reduce your spendings to a normal amount which will allow you to live on much less than what you’re used to.

Step 1: Stop spending!

This sounds much easier than it is. You’ll have mostly psychological barriers that have to be removed. If you’re really passionate about retiring early, than this is the step where it all begins. Check your bank account debits for the last 3 months and ask yourself at each and every one of them, is there a way to stop spending this money? For instance, do you really need all the insurances you have? Do you really need a car or is it just convenient? Consider other forms of travel like cycling, walking, taking the bus. Do you really need an expensive cellphone plan that includes the newest phone every year or will a cheap one suffice?

Start buying store-brand groceries from now on. Check the price on every brand and always pick the cheapest option. Start repairing things yourself, don’t pay a “specialist” to do it for you and don’t replace it unless absolutely necessary.

You’re not done with reducing your spendings untill you’ve reduced it to 50%!

Step 2: Start saving!

This step is much easier and pretty much follows from step 1. Don’t buy anything from your money saved in step 1. Instead, open a high interest savings account. Store all your money there to start earning rent. This will aid you in generating 25x your annual expenses. If you’re into investing, this may be a better option for you since it usually generates better results.

A good guideline is to save about 65-70% of your entire income. This is very possible by reducing your spendings. You really have to make it second nature to live on as little money as possible every day. It quickly becomes motivating when you see your savings account skyrocketing! Doing all the above will make sure you will earn enough through passive income in about 6-7 years. Make a spreadsheet for yourself calculating your savings rate from now until you’ve reached your magic number (25x your annual expenses). This way you can fine tune the amount you’ll need to save each month, plus it’s extremely motivating to be able to see yourself working towards your goal.

Good luck!