Have you ever wondered what it takes to retire early? Remember, retiring early does not mean 30 years old. Even retiring at 50 is retiring early. Since the retirement age is sometime after 60. Since any age before 60 is retiring early, anyone on just about any income can do it.
- Have little to no bad debt – Most of those who retire early are debt-free, they paid off everything including their house! Many people start at the Dave Ramsey baby steps! A graphic is posted below for you to peruse if you are unsure what they entail.
- Deciding which new purchases are necessary. This is where the wants vs. needs conversation that you have with yourself comes in. You can refer to this post about how this phrase changed my life and spending habits. This also deters the needs to add more credit card debt to any you currently have. Further questions you can ask are: Will this make me happy? How many hours would it take to pay this? Do I already own something that can do the same as this?
- Create a budget and follow it. Make one that fits you. For some it is extremely detailed and others are not, both are okay, as long you understand it and you can follow it.
- Invest. Do not just invest for the sake of it, do it wisely and with a purpose, as this will be your income during your retirement years. Many in the FI community recommend investing in mutual funds as you put your money in more companies, so if one stock does poorly there are others that will pull it back up. It essentially minimizes your personal risk.
- Side hustles. Learning a skill or having a side job that can be applied after your ‘retirement,’ as you can become bored if you end up going fishing all the time. Having something else you can do also gives you a sense of purpose and you set your own hours as you have achieved financial freedom.