Have you ever thought about what it would take to be able to retire early? The first thing to take a look at is how you would spend your retirement years. I’m sure you don’t want to spend all your time watching television or playing bingo! Perhaps you enjoy the structure of a 9-5 job and can’t imagine how you would fill your time. Or perhaps you’re like me and can’t imagine running out of things to do!
The first thing you want to do is take a look at your income and figure out what you’ll be earning for the next couple of years. You need to accumulate some money to set up an investment portfolio.
Next you want to take the steps necessary to cut your expenses and increase your savings.
Downsize! Do you really need to live in a large house? Are your children grown and moved out of your home and only occasionally come home? Downsizing may mean getting rid of excess stuff. Often you can find that you can live without much of the things you’ve accumulated over the years. One way to figure out what you really need is to pack up your stuff into moving boxes. Mark the boxes with the content and put a date on the box. Then rent a storage space or a friend’s garage and store your boxes there. If you need something from a box, take it out and change the date on the box. After 6-12 months it will become apparent what boxes you really need. The rest of it can be gotten rid of! Sell the items you no longer need on craigslist, eBay or on amazon. Put the extra cash into your savings fund.
Find a smaller home to live in that is close to your work and close to the stores. Find a location that is affordable, they say to find a place that is 10% of your income.
If there is public transportation you could even sell your car! When you really need a car you could rent one for long trips or to visit family. Think how much you could save by not having to spend it on gas, depreciation and insurance! We haven’t’ downsized yet but are in the transition stage where we are getting rid of clutter. We used to have two cars; one for myself and one for my husband. Since we both work at home we decided to try living with only one car. It takes s a bit of scheduling at times but we have saved quite a bit on gasoline and insurance by only having the one car.
I’ve mentioned this before but another way to save money is to learn to cook! If you can learn to cook from basic ingredients you will save money by not eating out all the time and you can watch what you eat and avoid health issues down the road.
Cancel your subscriptions. Think of all the various subscriptions you have to magazines, to cable television to the gym. Think of any non-essential subscriptions you have and cancel them!
Find hobbies and things to do that do not cost money. Start thinking about what you will be doing once you retire and get good at it.
Learn to take care of your things. Make things last, learn to maintain and repair the things you own.
Talk to a financial advisor. Take that sizable amount of money that you now manage not to spend and put it in an investment account. Learn about investing so you can understand what your investment advisor is talking about. Watch your account grow!
For inspiration, read accounts of other people who have retired extremely early. Perhaps you can be one of them!
When do you plan to retire? What tips do you have for saving money?
Linked To: WWHOP, PennyPinchingParty
Nancy on the Home Front 