Tuesday, May 8, 2007

"Top 5" Things To Achieve Early Retirement

I've decided to take on the "Top 5" challenge, as much to see what I could come up with this morning, in addition to being eligible for the random draw for $1001 USD being given away by Problogger.

So here goes.

To help you reach early retirement...however you define "early retirement" I can recommend the following five concrete actions.
  1. Buy your own home and ensure that you can have the mortgage paid off before your early retirement date.
  2. Monitor your cash flow by whatever method works for you. See my earlier post on this one for the easiest way I know how to do this.
  3. Don't let your job be your entire world...view it as just a means to an end- just a way to generate cash flow. Do an excellent job while your there, but be able to walk away from it.
  4. Drive a used car to avoid the heavy depreciation costs during the first few years of new car ownership.
  5. Always live "below your means". Save by paying yourself first and continually look for ways to enjoy life while spending less.


S. B. said...

Solid advice. Some may argue it is nothing they haven't heard before. However, as with most things in life, "we need to be reminded more than we need to be instructed". (Can't remember the source of that great quote.)

Also, with regard to the mortgage, I would say that to whatever extent you can eliminate the risk in large expenditures, that is probably a good thing. Hence, I am in favor of paying off your house, buying prepaid college contracts for your kids, etc, if you want a relatively unsurprising retirement.

Is paying down your mortage always the best monetary investment? Of course not. But as a risk reduction mechanism it is hard to beat. I don't expect to make money from my health insurance and my car insurance either, but they eliminate the worst case scenario, and that's why I have them.

nancy (aka 'money coach') said...

love your suggestions, esp. #5 - look for ways to spend less, while enjoying life more. Every summer, there are a kabillion free or very-nearly events in Vancouver. I try to proactively book these into my calendar. The result is a delightful summer (could summer in Vancouver be anything else ... small solace for our housing prices ...) with an intact bank balance.

Retirment Planning said...

I agree with all the advices but out of 5 my favorite is number 3. Let's not make our job as our entire world lets find ways on how to handle our finances well and build our own business. It's an early and better step in preparing for our retirement.

Richmond Hill said...

Sometimes, it's still hard to believe that some people spent their entire lives on a job and still came out with empty pockets because they didn't save up. It is important that while we're still young, we learn how to save money in order for us to have a relaxing retirement!