Do you want to have the option of spending less time working? Whether you are fifteen or fifty, now is the time to start working toward this important goal! By following any of the 11 recommendations below, you will reduce your time on the job by weeks, months, or years. Or maybe even decades!
1. Eliminate Debt
If you have credit card debt, pay it off as soon as possible and go to step 2. Once you have a solid emergency fund, credit card debt will no longer need to be a part of your life.
And kill the student loan debt! One of our nieces had a $30k student loan debt that Mr. Grumby nicknamed “Butthole Satan”. If she had made only minimum payments, she would have ended up paying around $48k. Pure evil, right? Now she’s committed to paying it off ASAP and minimizing the amount that will go to the lender.
If you are considering financing a car or if you currently have car/lease payments, please read Mr. Grumby’s post about the horrors of car debt and delayed retirement.
2. Establish an Emergency Fund
Be sure you have enough money to cover medical emergencies for yourself, your family, and your pets. And enough to cover urgent repairs for your home and your vehicle.
How much do you need? I would recommend at least 2x your annual out-of-pocket maximum. If you own a house, at least $10,000. A safer bet would enough to cover 6 months of essential living expenses.
3. Make Your Health a Priority
Remember, you only have one body. Carefully consider the fuel (you know – food & beverages) you consume to keep it running properly. Also, evaluate how your daily activities provide your body with adequate rest while maintaining strength and flexibility. If you’re experiencing pain, especially chronic pain, take care of yourself!
Your brain deserves special attention, too. Reward your mind with daily practices like gratitude and kindness. Start meditating. Downsize stress and negativity. Cultivate positive relationships. And let your curiosity lead you to opportunities to learn and grow.
4. Re-think How You Think About Money
Go to the Rockstar Finance website, sign up for the Daily Digest, and read one personal finance blog post each day. If the recommendations for the day don’t pique your interest, choose from Rockstar’s many categories to find something that that catches your attention.
Your curiosity will lead you to interesting discoveries and you may even re-think how you think about money!
5. Be The Boss of Your Money!
Once you know where all of your money is going, you can start making decisions about how to use it more efficiently.
Maybe you could travel to spend time with family or friends instead of treating yourself to that daily mocha frappuccino?
Take a look at a compound interest calculator to see how much you could earn by investing the money that you currently spend on x, y, or z.
6. Consume Mindfully
Observe your consumption (spending, eating, drinking) behaviors with awareness and curiosity. Pay close attention to any patterns that do not contribute to your physical, mental, or financial health. Then take what you learn, set up a 1-month habit change experiment, and document the improvements that you see.
- Shit You Don’t Need
- The Incredible Shrinking Budget
- Forgo the Festive Feeding Frenzy
- Experiment: Abstaining from Alcohol – The Happy Philosopher
- Uber Frugal Month Challenge – Mrs. Frugalwoods
7. Evaluate Your Housing Needs
If you think you are spending too much money or time or both on your current home, maybe it’s time for a change? Some ideas you might explore for reducing your housing expense:
- Is your American Dream really all about owning a house? Here’s what Mr. Grumby has to say.
- Use this tool to evaluate whether it makes more sense to rent or own.
- Whether you own or are renting – if you want to downsize and simplify your life, go for it!
- If you’re young and single, keep living like a college student like Zach at Four Pillar Freedom
- Want to move to a location where the cost of living is lower? Check out Mr. Groovy’s post about Geoarbitrage and Financial Independence.
8. Choose Efficient and Cost-effective Transportation
What if your car was …
- a statement about how much money you are saving
- a symbol of how many months/years you could could subtract from your projected retirement date
- a reasonably safe and comfortable tool that you use to get from point A to point B
- the most fuel efficient way to meet 90% or more of your transportation needs
Does that describe the car you are driving right now? If not, please read Financial Samurai’s post, The 1/10th Rule for Buying a Car Everyone Must Follow.
If you are physically able and live in an area where a car is not required for all transportation, find out how much you could save by riding your bicycle, walking or using public transportation once in a while. We’ve been living without a car for over 2 years now and have loved it. Here are a couple of related posts:
9. Increase your Savings Rate
If any of the above ideas have resonated with you, you are in a dynamite position to reduce your spending and increase your savings rate. The more you save, the earlier you can retire!
Check Mr. Money Mustache’s inspiring article The Shockingly Simple Math Behind Early Retirement.
10. Simplify Your Investments
Investing does not have to be scary or complicated. And when you pay someone else to manage your investments for you, you’re giving yourself a pay cut in retirement. If you are currently using a financial advisor, be sure you have information on both their fees and on the expense ratios of their recommended funds.
Last year, after reading JL Collins’ book The Simple Path to Wealth, Mr. Grumby and I decided to manage our own investments. All of our investments (taxable, tax-advantaged, and Roth) are now in low-fee Vanguard and Fidelity index funds. When we retire, we’ll roll everything over to Vanguard.
If you’d like an online peek at some of the great knowledge covered in JL Collins’ book, check out the stock series on his blog.
11. Be Happy!
Surround yourself with habits, decisions, information, and relationships that build your happiness. I’m not much of a gambler, but I bet you’ll discover that some of the best things in life are free!
Bonus: Share Your Financial Journey with Others
If you are committed to making this Accelerated Retirement thing happen, keep yourself on track by sharing your financial journey. If your family and friends aren’t on board yet, share comments with your favorite personal finance bloggers … or maybe even start your own blog!