For professional skiers the best time to retire is when they start to go downhill. But what about the rest of us? Well for most people the question isn’t at what age we should retire, it’s at what income. 😉 People who want to retire early seem to have a clear and consistent focus to grow their wealth so that it can provide them with enough passive income to sustain their lifestyles forever. This can be done through a number of ways such as reducing living expenses, increasing income, and making high investment returns. 🙂
I recently read a CNBC article that featured a couple, Carl and Mindy, who retired in their early 40s with a million dollars. And they did it pretty much the same way as most other early retirees.
In 2012 the husband-wife duo with 2 kids already had $570,000 saved up. But they were inspired to retire early so they set a clear goal to build a portfolio of $1 million and no debt. And earlier this year in 2016, they have accomplished their dream. 🙂
The CNBC article suggests that “anyone can do the same — and you don’t have to be an investment banker raking in millions. All it takes is smart decisions along with intelligent saving and investing.”
Here are some steps the couple took to reach their financial goals.
- Track spending – “My wife and I wrote all of our expenses in a book,” says the husband.
- Live in an affordable location – The couple resides in a low-cost area in Colorado, and lives on $2,000 a month for the whole family. They mention this would not be possible in San Francisco or Manhattan.
- Cut bills – “I learned that you don’t need a lot of money,” said the wife. “My quality of life has not changed since we became laser-focused on cutting out our expenses. I don’t need the cable TV. I don’t need a super-expensive phone plan. I don’t miss all this stuff because it didn’t really add to my life,” she said.
- Invest in appreciating assets – The couple bought a $176,000 fixer upper home that they estimate is now worth over $400,000. They also I bought 2,000 shares at Facebook at $30 a share which is now worth around $120 a share!
- Consistent savings – They’ve continuously put away $2,000 per month into their investment portfolio.
I think this couple has done a wonderful job of managing their money. And they track their progress on their blog, 1500days.com. I like anecdotal stories like this because it’s real life confirmation that I’m headed in the right direction with my own financial journey. I currently track all my expenses, live in a cheap city, have about $500K of wealth, save at least $2,000 per month and don’t have cable or an expensive phone plan. These are common practices that nearly all early retirees follow. 😀 So theoretically I could also become a millionaire in just 4 short years if I start doing what this couple has done.
But of course everyone has different opinions about the story. I would be remiss if I only shared my own personal thoughts. So below I’ve quoted some interesting responses to the story by other people. I found these in the comments section of the article which candidly reveals some alternative perspectives on the topic.
“$30,000/year for a couple? That’s maybe doable until you have health costs.”
“So, get lucky when buying a house and investing. Got it.”
“Give me a break….they started with $570K, what an awful article.”
“They’ll be broke by 50…No way a family of 4 can live on $30k a year, and send 2 kids to college. They are delusional. I would love to retire early, but to punish my family and live like hobos, no thanks.”
“How is it possible to get past an editor the amazingly idiotic notion that “The good news is, anyone can do the same — and you don’t have to be an investment banker raking in millions.” Anyone (or couple) can save $1M in 4 years? Most couples make less than 1/4 that amount in 4 years!”
“This has to win the annual award for bait click. “COUPLE SAVES $1,000,000 IN 4 YEARS!” (oh yea, forgot to mention they had $570,000 to start with!)”
“They say they are retiring and then 3/4 through the article they state they are going to continue working after retirement. How is that retiring and not just changing jobs?”
Random Useless Fact
Archaeologists don’t dig up dinosaur bones. They just study past human cultures. Scientists who study dinosaur bones (or fossils) are called paleontologists.