Staying Motivated Early On

[Greencheese]

Out of curiosity how did/do you stay motivated early on in your quest to RE? Long story short, I'm putting probably just over $2k each month towards my FIRE fund and have hit just shy of $50k. I feel that compounding interest will finally start taking a noticeable/motivational effect (aka grow faster than I contribute) at $250k for me. But since most of my friends are not looking to FIRE they aren't saving like I am, they're living it up and spending that extra $1k-$2k they earn each month that I'm not. How did you motivate yourself during the early years when the FIRE fund was still small? ER is far more attractive to me than a Ford GT or brand new $3k computers, but shiny things today always have that temptation over extra shiny things tomorrow.

 

[Senator]

Everything you buy, think on how much that delays your retirement in terms of money you will need in 25 years or so.

Spend $1,000 now, that's at least a month longer you have to work. Spend $20, that's another day. And so on.

Keep the faith.

 

[jIMOh]

Focus on the things which make you happy which don't cost money

 

[photoguy]

You can set yourself shorter term goals that you can track and watch your progress.

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[NgineER]

Set a budget/savings goal for fun categories as well, not just ER. Once you have saved up enough money in those funds, feel free to spend it on something you'd really like to have, something you think it be worth spending it on.

On the other hand, I often find that while I am waiting to replenish the fun account, that the initial desire to have the latest gadget wears off

 

[Lcountz]

Look at ANYTHING out there that is five years old.

A car, a computer, a TeeVee.....they were ALL new and shiny once, but now are getting older. Still work, but are not the new shiny ones.

Whatever you buy today new and shiny will also get old. And then the money is gone. And the item still does the same basic stuff a brand new one will ( cars, TV's and computers especially).

Think of all the stuff out there that was bought new and is now obsolete and in the dump. VCRs, CRT computers,maybe a 1995 Oldsmobile, all stuff people "Had to have" when they were new!!! That'll keep it in perspective.

When you are ready to retire early, and are financially independent, all your friends who are blowing it all now will still be toiling, and you will be laughing. All today's I-crap, cars, electronics, clothes, shoes, etc will be in the dump.

There is NOTHING you can buy for money that is as valuable as time for yourself.

 

[someguy]

It's tough at first. I virtually guarantee some of them are sweating bullets living paycheck to paycheck. If you know them well enough, I bet at least one would even admit to it. And sooner or later, an unexpected financial hit will knock one of them into a visible tailspin.

Also, if you have situations in your job (or see others around you) where you have to repetitively deal with crap you really don't like, remind yourself whenever it flares up that with the $2K you didn't spend this month, you're that much closer to having the "FU" option.

 

[Totoro]

In the early accumulation years (26 - 31) I was too busy and exhausted to spend money

Always been focused on not spending alot though. I just don't get the high that people get from spending or acquiring things. Exception is travel.

When I see friend or family spending much money I usually feel sad for them, sometimes bewildered even. Few months ago one guy told me he spent 4.000+ usd on a living room couch. That's about two months of take-home pay for him. I just don't understand that kind of reasoning.

Just to say that my balance is not shiny things tomorrow vs. shiny things today, but more like increasing freedom vs. shiny things.

That keeps me focused on adding to the pile. And every day I thank past-self for the work and sacrifice he has made

 

[Greencheese]

Thanks for the tips everyone! After one of those awful days at work, just knowing that the groundwork I lay today gets me that much closer to FU money than 65 can only help motivate. Making some additional spreadsheets to track the progress percentages instead of just total balance will absolutely help.

 

[MRG]

I remember when I first realized we were FI. A project came up and it was "Ground hog day" for the forth time, same client, same inept PM, no staff to support the system after it was built. I walked into my managers office, wrote FYIV on his board and left.
He came by the next day, "I understand FY, what does IV mean?". I just smiled said "I'm Vested". The freedom that event gave me made alot of doing more with less worth it. BTW my role on the project became special consultant. No day to day bs.

 

[Walt34]

All today's I-crap, cars, electronics, clothes, shoes, etc will be in the dump.

To remind me of that I keep my $600 Sony Betamax VCR on a shelf in the basement. Around 1982 $600 was a big chunk of change for me.

I did learn.

 

[Maenad]

I agree with setting aside fun money, don't deny yourself everything.

I hate to say it, but - get new friends? Most of our friends either don't make as much as we do, have kids that take a lot of their $$, are similarly frugal, or just respect our choice to not spend the way they do. Hanging out with people who understand that a picnic in the park is just as enjoyable as a $500 prix fixe dinner* helps a lot.

Also, the first time you need some of your stash for a true emergency, or you're able to handle getting laid off from your job without panicking, you'll get a big boost in motivation. And those times will come.


*OK, so the $500 prix fixe dinner is probably better, but if the company is right, I prefer chilling out in the fresh air.

 

[Retire2035]

I made one very large mistake early. I bought a Mercedes and the upkeep/repair costs just about killed me. Somehow that car got totaled by some teenagers joyriding while parked in my driveway. Luckily no one was hurt.
Took that check bought a used Nissan and now only try to splurge on travel. I don't have a huge net worth yet but once I hit 100k it made me focus more on each dollar I spent because I really started to see the cash flowing.



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[someguy]

One other thing I'd add that I've seen repeatedly, including with myself. When you LBYM, there seems to be a positive self-reinforcing cycle that revs up and accelerates progress toward FI. When your expenses are low enough and your cushion big enough, you can take more risks that make the climb to FI nonlinear.

There have been at least a handful of times in my work in the past four years where I took a risk by standing my ground on something that indirectly or directly affected my income or expenses. Ten years ago (perhaps even five), I probably wouldn't have had the courage to stand firm which would have cost literally tens of thousands of dollars a year. Those dollars are now increasing my net worth even further, which further increases my ability to stand firm, which can lead to more dollars... You get the idea. The key is to have the patience while things get going initially.

 

[Ready]

I think it's tough to be focusing on ER in the early stages of your career. I always tell people to find a career they love since they will be spending so much time at it. I had no desire to ER in my 20's or 30's. It wasn't until my 40's that burnout began to take place. It's best to find a way to really enjoy what you do, and others have said, find friends who also support LBYM so that you can enjoy some fun times together without spending substantial amounts of money.

 

[FIGuy]

I'm 32 and 8 years into my career. I left school owning a death trap old pickup and about 25k in student loans. I was financially pretty stupid up until about 25 years old, spending on pretty things. Motorcycles, computers, an old, leaky 35' sailboat...

2007 scared me straight and I'm happy to have had that experience early on instead of at age 45. The sum total of DW and my physical assets is maybe 8 grand at this point. Everything else is investment assets. I am planning on buying a 5k trailer-sailor this year, but otherwise essentially want for nothing these days.

As others have mentioned, I see plenty of highly paid coworkers saving nothing. A few years ago, maybe I did envy their high cost fun times, but now it's become kinda sad. After a few years, the financial security (before FI strictly?) starts to let one relax and is worth more than any pretty things. "FI" is kind of a spectrum if you like. It's a process of realizing that "no matter what, I'm going to be financially OK". My current plan is to never work another job that doesn't make my life better than the alternative of not working. Most people could achieve some version of this, but don't, and I think that's a real loss.

Something else that really helped me was to understand WHY people spend on what they do. The psychological basis under the choices. People tell themselves a story of logical trade-offs ("the luxury car features are worth an additional 30k since I spend 2 hours in my car each day"). In reality, some funny evolutionary things are happening underneath. The book "Spent" is a great start on this path.

 

[FIREd]

The thing that kept me motivated early on was tracking my net worth regularly. It was great to see regular progress. I also think that, instead of focusing on the final number, it is good to break it into a series of milestones. Hitting a milestone every year or two helps to reinforce the feeling of achievement.

 

[Andre1969]

It was actually easier for me in the early years to stay focused, because even when the markets were down, my additional investments were large enough to still have some impact. And it didn't take long for my savings to double. For instance, from 5K to 10K, 10K to 20K, etc.

It wasn't until I hit around 70K that things started to get frustrating, but that was because of the times...I hit that mark in May of 2001. The rest of the year was bad, as was 2002, and I don't think it was until the middle of 2003 that I hit 70K again.

Nowadays, my additional investments don't have such a huge impact, from month to month. At the most, I'm only going to invest about $26,000 in any given year (401k, match, plus Roth IRA). But nowadays, I could easily lose (or gain) that much more more in just a couple weeks. I don't think I've gotten to the point that I've lost/gained that much in a single day yet, but I know there have been times that I've lost/gained $10-15K in a single day.

I try to stay motivated, but it's hard sometimes. I've thought about cutting back on my 401k investing, but one thing that stops me there is the tax savings. Every dollar that I don't put into the 401k is only giving me about 67 cents, because of my taxes.

 

[UnderTheRadar]

I agree with the comments/will add:
1. avoiding friends that you know you will try to keep up with financially
2. Avoid the American allure with expensive cars...and malls
3. I spent a lot of time working on climbing the corporate ladder (and salary) to save more.
4. I have read and re-read lots of financial books - mainly for the sections on delayed gratification
5. I have downloaded Stanley's - Millionaire audio book on my ipad. I let it play all the time.
6. Read this board.

I once heard it said that it is simple to do one push-up a day, but it is hard to do one push-up each day for your entire life. Persistence and faith that it will pay off in the end. It can either buy you time (early retirement) or it can buy you expensive stuff later...



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[UnderTheRadar]

In short....brainwashing.


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[samclem]

Everyone is wired a bit differently, but what worked for me in the early days was to >not< concentrate at all on my savings/investment balance, and to automate the savings. The money came out of my paycheck automatically and went directly into MFs, I never saw it. That worked great.

If the retirement money is largely in equities (which makes sense for most people in their 20s-50s) then there will be ups and downs daily, monthly and yearly. Concentrating on the balance or on net worth, etc just brings angst.

What I did concentrate on was how much each dollar I saved each month would grow to by the time I retired, assuming historical returns. I think I assumed 7% or 8% real at the time, which I now think is too high. But adding just 10 dollars to my savings every month (at 8%, for 20 years) results in over $5,800 in the account. Now, that disregards taxes and inflation, but it's pretty motivational for a young pup. I just concentrated on maximizing the monthly investments (especialy when I got a raise--about 50% of it would go into retirement investments, so we never got used to spending it) and trusted the market to do the rest.

Reading this board should help a person to stay motivated, along with finding was to fight the spending "push" of our society. Having "hobby/fun money" allowances for DW and I also helped us avoid feeling deprived. If I wanted something big, I saved up my "fun money" for some months rather than dip into the checking account/retirement savings. It didn't kill me.

 

[Closet_Gamer]

One other thing I'd add that I've seen repeatedly, including with myself. When you LBYM, there seems to be a positive self-reinforcing cycle that revs up and accelerates progress toward FI. When your expenses are low enough and your cushion big enough, you can take more risks that make the climb to FI nonlinear.

There have been at least a handful of times in my work in the past four years where I took a risk by standing my ground on something that indirectly or directly affected my income or expenses. Ten years ago (perhaps even five), I probably wouldn't have had the courage to stand firm which would have cost literally tens of thousands of dollars a year. Those dollars are now increasing my net worth even further, which further increases my ability to stand firm, which can lead to more dollars... You get the idea. The key is to have the patience while things get going initially.

+1

LBYM isn't about no risk taking. It's about creating a solid foundation from which to take intelligent, high pay off risks. I've done it four times. I've batted 2-for-4. Because I built a strong foundation the misses haven't been disastrous and the wins have been huge accelerators.

A lot of people wonder how I've gotten so far in my career at a young age. It's particularly frustrating for the people who are smart, have worked hard and are actually good at what they do...but "they just can't seem to get ahead." What they're all missing is the big risks...and they don't want to admit that they've built a lifestyle and personal balance sheet that hampers risk taking.

As I've told a number of people, if a risky job move implicitly puts your house at risk, your much less likely to take that risk. If you could fall on your face and be fine for a while, you can take a leap when it makes sense.

During one risk that didn't pay out, I wound up taking a 60% pay cut...but my wife and I ran our house cash flow break even for 6 months on 40% of my previous salary. It was hard, but we were able to do it because we didn't have a pile of fixed expenses.

One of the risks that paid out resulted in a 3x increase is salary over a 5 year period. And of course, I held my lifestyle constant during that income ramp so we were able to accelerate our retirement planning by many, many years.

To the OP -- Stay focused and prepare yourself financially so you can make the risky move when warranted. Good luck!

 

[Sea Kayaker]

Someone already mentioned it upthread, but tracking our net worth diligently really helped me stay focused and convinced me that if I stayed on course with LBYM that ER wasn't only a possibility, but almost a slam dunk.

I will admit that as a childless couple with good dual incomes we saved at an extremely good clip over a ten year span. Each net worth update showed a lot of progress - by getting into a routine of tracking net worth, it kind of became addicting to see the numbers grow. We would be bummed when we made a big luxury purchase (fortunately a rare occurance for us) and our net worth progress would stall for a month.

Deep down, I always knew that I desired ER more than any sports car, boat, or any other luxury item that I could purchase. I knew that as net worth grew, ER was getting closer... I think at some point I grew a bit obsessed with net worth tracking, but it was a helpful exercise to help me get to ER by 42.

 

[rodi]

Keep in mind there are two advantages to staying on track with socking away money.
1) your nest egg grows from the contribution and compounding.
2) you learn to be happy with a smaller budget.

The latter was probably a bigger factor in my ER than the former. Talking to coworkers when I gave notice they were shocked I could afford to retire. I told them my budget and they were shocked that I lived on so little. I pointed out that I was comfortably middle class despite maxing out the 401k (and catchup past 50), making huge extra principal payments to my mortgage, and pre-funding big contributions to the kids' 529s. With all that I was living on well under 50% of my gross. When I explained it to them, I saw a few lightbulbs go off.

 

[retirementguy1]

Most people agree that you need at least 25x your expenses in your retirement account but we really don't follow the math all the way to its logical conclusion. This means that any time you want to buy a $100 bottle of wine in retirement you really need $2500 in assets to provide that $100. Now think of the money zombies that upgrade their phone every two years for $200 when their current phones still work. They will need $5000 to provide the $200. This makes you feel like a $200 cell phone is quite luxurious. lol.

Any time you think about buying something, do this exercise in your head and decide if it is really worth it. This keeps me from buying a bunch of crap I don't really need.

To give credit where it is due I got the idea from Everywhere Once | Independent Travel Blog .