Question For You Achievers!

[MJ]

Call me selfish,
but
maybe there is a silver lining in the thinking of many people that they don't have enough money to retire early
because
they will continue to work and fill the diminishing coffers of SSA, Medicare and the US treasury.
I would love to be able to get my full SS and Medicare benefits in 5+ years, and for the additional 30+ years.

Cheers

MJ

Hello MJ. I agree with your theory. Surely the millions
who "must" continue to work (they think) will help those of us who have opted out. I always tell working
people that it's a comfort to me to see them working and keeping the economy moving forward, as I am not
contributing a damn thing. This is not literally true of
course as I still invest/consume etc. Still I kind of enjoy
gigging the working stiffs.

John Galt

[brewer12345]

I gave up ...these people (my brother-in-law and sister-in-law) are good enough people, my guess based on what they do for work, is that combined they pull in about 85K, BUT...they have a $1600/month mortgage, $700/month property taxes, car payments on 2 new cars, 3 cell phones in the family, cable tv, new addition on the house, new appliances etc etc etc....no wonder they don't think anyone can get by on $80K...they couldn't.

I on the other hand would be perfectly happy to inherit $2Million bucks and/or and permanent income stream of $80K if anyone has no immediately family they would like to leave it to...

I'd be thrilled to inherit $2 million, too, provided it wasn't contingent on a close family member croaking.

However, I will dispute somewhat your sentiment that anyone making $85k or so should have more than enough to play with. If one inherits a portfolio that can throuw off that much, it is pretty easy to modify your expense base and tax bill radically if you need to. In the case of those still stuck in the salt mines, that is not necessarily the case. I am n the 6 figure category (barely), and due to the high cost of living where I am things are a bit tight from time to time. Admittedly, this is partially because I live in an environment of intentional scarcity due to heavy investment contributions and rapid debt amortization, but even if I were not devoting significant resources to net worth building I would have a much higher cost of living just staying close to my chosen labor market than if I had the freedom to move to a lower cost area.

My taxable income is "below the radar"
and yet I can do just about whatever I want
without suffering from "want". Of course, I am pretty
friggin' old and have a working wife. Makes a difference. Otherwise, I advocate
the "NIKE" approach to ER. "Just do it!"

John Galt

[unclemick]

Oldest nephew/wife are in San Diego by now. Navy officer/civilian contractor(she's out) with presumably lifestyle assumptions. Haven't found a house yet and couldn't sell the 32' sailboat and trucked it down from Whidbey.

Soooo - say's I - live on the boat since you gotta put it in a marina anyway. Answer - shocked silence.

Heh, heh - this is my 'think out of the box' week. Appolgies to Billy.

[MJ]

Soooo - say's I - live on the boat since you gotta put it in a marina anyway. Answer - shocked silence.

Isn't having good (un)common sense a beach?

MJ

[Beachbumz]

I believe it would be very difficult to achieve super early retirement (under 40) by saving alone. I believe you have to use some form of leverage (ie other peoples money) such as real estate or business, etc.

We did make a low six figure income, but if we hadn't invested in real estate, we would still be working. If you start at 28 (I started at 29), you can accumulate wealth pretty quickly (with some good investments and a little luck).

By the way, we are 18 months (still newbies ) into early retirement. I'm 37 and my wife is 36 and have had no regrets.

Yep, knowing what I know now (back then) I could have
done it by age 40. Such a thought never entered
my brain until well past that age. Real estate would have been the primary base for me also. Owning my own company helped a lot, but phasing out of what is
basically a one-man show can be tricky. Anyway, no
regrets. I found out today my brother just took a new
sales position (he is 57). Have no idea what his
thoughts are vis-a-vis retirement.

John Galt

[dex]

Tommy,

I admit it . My wife is the queen of accumulation. A pack rat but also with money. Frugality (and happiness) is not a destination but a way of travelling. After 30 years of wedded bliss we got it because she socked it away.

BUM

Does you wife have a sister about 40 with the same mindset? I'm single

[Hyperborea]

I believe it would be very difficult to achieve super early retirement (under 40) by saving alone. I believe you have to use some form of leverage (ie other peoples money) such as real estate or business, etc.

Two counter-examples are intercst at 38 and Galeno at 36(?). Both just well paid employees and good savers if I remember what they've posted correctly. I'll be out at 46 but I didn't start planning and saving for FIRE until I was ~35 and again just a well paid employee and saving.

[Beachbumz]

Hyperborea,
Another counter-example would be Paul Terhorst, whom I so glad had the vision to write the book that started it all for me. I never said it couldn't been done, I said that I believe it would be difficult to achieve pre-40 retirement just by savings. As you have just stated, if your plan works out it will take you approx 11-12 years to achieve it (that's assuming your plan works as you think it will, I know that mine did not). And what sacrifices are you making in your current lifestyle to do it It also depends on how much you think is enough to live your lifestyle, which is different for all of us.

My wife and I retired at 36 (2 months after my 36th bday, my wife was 35) and we started basically at age 29. We also did not sacrifice on our lifestyle, in fact, aside from maxing our retirement accounts, we weren't very good savors at all .

I'm not trying to be argumentative here, but there is more than one approach and it depends on how quickly you want to achieve your goals. As for me, I felt like I would be dead from stress by age 46. Perhaps you should consider reading Robert Kiyosaki's book "Who took my money" for a different perspective

In any case, good luck to you in achieving your early retirement goal!

Robert Kiyosaki's

personally, I don't like this guy's advice. If we all followed it, I'm guessing that 80% of us would still be working.

[Beachbumz]

Cut-Throat,
I agree that you have to read his stuff cautiously (as with most financial books), but, in his last book, he does make some good points for leverage (he calls it velocity of money). It is what got me here at age 36! Overall, I'm not a huge fan of Kiyosaki, I prefer some of the other authors recommended on this sight.

[Whakamole]

Leverage works both ways... quite a few people discovered this in 2000.

[Beachbumz]

Absolutely, and that is why most of my wealth (not that there is a whole lot) and ALL of my leverage was in real estate. If it had all been "invested" in the stock market (without leverage), I would still be working today. I do not believe that buying stocks "on margin" is a smart strategy.

[unclemick]

Leveraged real estate kicked my butt and the stock market bailed me out. I seemed to have had a talent for places with spotted owls, quadupling of school taxes, and salt water(mini earth quake) intrusion into artesian well water.

I may have broken even on real estate over twenty years - provided you don't count inflation.

Location, location, location.

[Beachbumz]

I have had about the same luck in the stock market as you have had in real estate. But, you are right, location, location, location and timing timing timing. I am finding it difficult to find good deals in real estate and the stock market these days.

[Hyperborea]

As you have just stated, if your plan works out it will take you approx 11-12 years to achieve it (that's assuming your plan works as you think it will, I know that mine did not). And what sacrifices are you making in your current lifestyle to do it It also depends on how much you think is enough to live your lifestyle, which is different for all of us.

I'm not sure that I'm making any lifestyle sacrifices. *I don't have an expensive car or giant SUV, a monster home, eat dinner in a restaurant 5 nights a week etc. etc. that a lot of others in my job do. *However, I don't think it is a sacrifice. *It may sound kind of weird to some but deciding what matters to you and buying only what you need or really want is quite liberating. *We don't have mountains of junk littering the house - abandoned toys that kept us happy for nanoseconds before being discarded. *We eat quite well and healthily at home most nights and restaurant meals are a treat that we enjoy and not an expected part of the day.

That said we do spend on what we do really enjoy. *We're off to Italy in about 5 weeks, we've gone around China by train, I've got a couple of guitars, until it's sad demise I had an older Porsche that I used to autocross (and do my own maintenance on), we do eat out in some quite nice restaurants once in a while, etc.

As for 11-12 years, you could count it that way but it took a couple of years to turn the finances around to where we were saving appreciably for early retirement. *It's a little more like 9 years.

As for me, I felt like I would be dead from stress by age 46. Perhaps you should consider reading Robert Kiyosaki's book "Who took my money" for a different perspective.

I'm not sure (nor is anybody else other than his acolytes) that Kiyosaki has actually made any money other than as a financial "guru" selling self-help books and seminars. Tony Robbins was in town last week and his acolytes paid $2000 to sit close to the stage, kiss the hem of his pants, and get to walk on hot coals down the streets of San Jose. I'm not sure those paying $2K are getting to ER but Tony Robbins sure is getting wealth off of them. I don't have it in me to become a "guru".

As for real estate, that is a pretty perilous option for short term (i.e. less than 10-15 years) wealth building. It can work out but it can and does fail. Investing in one local real estate market is particularly risky and investing in more than one gets expensive and difficult due to the distance.

[Beachbumz]

Tony Robbins is another great example of a person that has learned how to use leverage as a way to increase his wealth (You don't have to like him to see that). Instead of talking one on one for $300 an hour, he fills an auditorium at $2000 each (I won't be one of them). As far as Kiyosaki goes, I wish I knew another book to recommend that talks about leverage, but I don't. If anyone else does, I would love to know the title.

It seems that a few people on this board missed my point, and that is if you can find a way to leverage yourself and/or your money (real estate, your own business, writing and selling books, being a musician or athlete or speaking to audiences, whatever, there are lots of ways) you can achieve super-early retirement and with more (sometimes a whole lot more) money. I personally can't sing and am scared to death to speak in front of people , so I chose Real Estate and small business. This strategy worked for me (long before kiyosaki ever wrote a book about leverage) and quite a few other people that I know, but that doesn't mean that it is right for everyone. It was a lot of hard work and there were more than one occasion that I questioned what I had done. Real estate can be risky and you have to research and choose your investments wisely, but the same can be said for the stock market (which I have seen be very risky over the last several years). I have personally met only one person who has gotten wealthy investing prior to age 40, I have met quite a few who have done it in RE or business. I have also met quite a few who failed at all of the above.

Bottom line is I think it is only fair that the author of this thread hear from those of us who have achieved very early retirement and the strategies that we used to get there. Then they can make an informed decision what strategy they want to use in their quest for early retirement.

By the way, Hyperborea, I certainly did not mean to imply that YOU were making sacrifices, as there is no way I could know your situation. It sounds like you are enjoying yourself, and as long as you and your wife don't feel like you are sacrificing...then you are not! Anyway, I drove a Toyota Camry for 12 years, not because I had to but because I wanted to and that is the key. Good luck to you in your quest for Early Retirement, it IS all it's cracked up to be.

(Sorry for the long post :P)

[unclemick]

More books on real estate leverage have been written (and gone out of print) than you can shake a stick at. My first in the 60's was along the lines of: How I Turned $1000 into One Million in Real Estate in My Spare Time by William Nickerson.

Of course the lucky turd lived in California and I believe had a stable job (Ma Bell or something like that).

Location, location, location - mine sucked - although we levered, paid off, and literally sold and consumed our duplex the first ten years of ER. And avoided tapping 401k/IRA - not rich, but not too bad.