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No boss has ever said, “I’m promoting you and giving you a raise, and now you can work less.” It’s always more. More responsibility, more pressure, more time spent working, and more intrusion into our lives outside of work. We might get more money, sure, but we earn it the hardest way possible, by trading away our brain space and maybe even our dreams.
Or think about Carrie Bradshaw on Sex and the City and all her $400 shoes. It’s hard to imagine she went from buying shoes at Payless one day to buying Manolos and Jimmy Choos the next. Most likely, she gradually worked her way up the price ladder, with each step not feeling like a significant enough difference to warrant concern. It’s this invisible slippery slope that makes lifestyle inflation the single biggest threat to early retirement, a fact backed up by research.
Lifestyle inflation is a phenomenon that affects people at all income levels and is the result of a psychological phenomenon called hedonic adaptation, which is the tendency we all have to adapt quickly to changes in our lives and return to a baseline level of happiness, regardless of how many good or bad things may happen. Put in purchasing terms, it means that if we set our sights on a new car because we think that will make us happier in some way, we may get an initial happiness boost from buying it, but pretty soon, we’re no happier with the car than we would have been without it—though
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Examine what you spend money on now that you didn’t used to spend on and which of those additions truly make your life better. Consider which of those new expenses cover true needs, like school expenses for kids, and which cover wants, expenditures that aren’t necessary but are purely optional.
Mindful spending is spending you plan for and consider thoroughly before handing over your hard-earned cash, spending where you make sure you really need that thing or at least that you’ll use it often enough to justify the cost.
We trade our time, energy, and brain space for a paycheck. In essence, we’ve already paid for the money itself by the time it arrives in our hands.
When we recognize that the money we earn can in turn be used to buy back our future time, it’s suddenly much easier to determine what feels worth our money and what doesn’t.
Reorient your thinking about money to see it as a repository of the time you spent earning it and a tool to buy that time back, instead of as a means of rewarding yourself for your work.
Anyone can save a high percentage of their income if they spend nothing. But a life in which you spend nothing or pinch every penny to spend as little as humanly possible is not likely to be a life that feels worth all the effort you put in at work.
The converse behavior is important as well: spending money on people to show your love. If that’s something you do, could you convey the same sentiment without spending that money or by spending less, for example, by calling them, spending time with them, or doing things for them instead?
We made other changes to our habits, too, like forcing ourselves to stop thinking of shopping as something we do, always grocery shopping with a list, and making a rule that we can buy something online only if we’ve had it in our cart for a full week so we have time to reflect on whether it’s really a worthwhile purchase.
Everyone who’s ever had a job understands the idea of earning money.
Regardless of which form of early retirement you’re interested in pursuing—full early retirement, semiretirement, or career intermission—the principle is the same: You want to invest as much as possible, as early as possible, in investment vehicles that will grow to give you a steady stream of income for life, long after you’ve stopped relying on mandatory work to provide for you. And those income streams keep coming whether you ever lift a finger (magic!), freeing you up instead to spend your time on more meaningful pursuits outside of normal employment and entrepreneurship structures.
You don’t have to beat the markets by picking the right stocks. You just have to match the markets.
You don’t have to be lucky with timing to do well in the markets.
Inflation may be a bigger threat to your money than market risk.
In addition to paying attention to risk profiles, fees should be high on your list of things to look out for.
Good health is not something we can buy. However, it can be an extremely valuable savings account. —ANNE WILSON SCHAEF
You only have to do a very few things right in your life so long as you don’t do too many things wrong. —WARREN BUFFETT
The secret to getting ahead is getting started. —MARK TWAIN
Formula for fast savings progress: 1. Underspend on housing 2. Underspend on transportation 3. Focus on increasing your earnings 4. Bank your raises, increasing your savings rate to match your increased earnings
For us, nothing made the journey feel faster than when we instituted a rule that we weren’t allowed to complain about work. We could recount things that had happened at work, but we weren’t allowed to complain about the fact that we had to work or about things that would be common and expected in any job. That ban helped us remember that being able to work is a privilege in itself, and it made us more appreciative of the good parts of our own jobs.
What are the parts of work that you enjoy doing and might even miss? It might be a particular task that you are especially good at, something you get to learn about, or interaction with coworkers you respect or like. If nothing comes to mind immediately, there’s a good chance that your mind is tricking you into thinking that all of your job is bad just because part of it is bad. This is rarely true, so challenge yourself to dig a little deeper.
When I started thinking about work this way, I quickly realized that not only did I love giving presentations and being asked for my opinion in challenging situations, but I would actually miss those things after we retired early. And that drove me to think of ways I could incorporate presenting and solving challenges into my early retirement, so that I didn’t have to give those things up entirely. But more importantly, focusing on how much I enjoyed those things made me look forward to work more and it helped me brush off the stuff I didn’t enjoy as much.
During my last few years of work, whenever I’d do a presentation, I’d remind myself beforehand that this was something I’d miss a lot after we quit, and I’d pour my whole heart and soul into that session.
JOURNEY ACCELERATION CHECKLIST Determine whether you’d like to try to earn more and, if so, how you’ll go about it. Negotiate a higher salary or rate where possible. Investigate side hustles or retraining opportunities. Look for ways to cut large costs like housing and transportation. Trim travel spending through travel hacking. Build social networks for support in your journey. Practice regular self-care.
There are risks and costs to action. But they are far less than the long range risks of comfortable inaction. —JOHN F. KENNEDY
BULLETPROOF PLANNING CHECKLIST Determine your asset allocation for both long-term growth and risk management. Decide which withdrawal strategy you’ll use. Create your bare-bones budget and determine how you’ll cut expenses if you need to. Determine what your sources of backup capital will be. Make sure you have adequate insurance for your circumstances. Create your estate plan. If you have a partner, discuss how you’ll handle divorce or splitting up. Determine how you could optimize your income to reduce health care costs, if needed. Stay current on financial analysis impacting retirement
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The purpose of life is to contribute in some way to making things better. —ROBERT F. KENNEDY
