Why Frugality is the Key to Early Retirement
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- เผยแพร่เมื่อ 8 ก.ค. 2024
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I am convinced frugality greatly accelerates your path to early retirement. Do this and you are looking at not working 30 years but more like 10 or less depending on what savings rate you reach. I also share some of my tips to keep expenses low and some ideas for saving money you can try.
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In quest for early retirement, still set aside fun or travel money since you never know if you'll walk out and get hit by a bus.
Correct. The question is then how much to set aside? I figure 10% of what you save. That is, all money that is non-discretionary.
If you get into a relationship with even halfway high maintenance girl or your girl doesnt have her tubes tied plus taking daily birth control pills then forget early retirement or even getting by somewhat financially stable. Young people wont like to hear this at it may hurt their feelings but I'm just giving facts.
@@rejectionistmanifesto8836 I feel like this depends on the person a lot, like anything else. By my best calculation, the kids in our family hardly cost our parents anything and there were a bunch of us. But we did not expect the best of everything - stuff, sports participation, vacations, expensive education etc. It was good but frugal, and anything further we'd have to figure out how to get for ourselves. That said, staying single until I retire because I don't know confidently how to find or identify such a person... lol
The thumbnail says it all. It is the KEY. High savings rate, especially in early years, will allow you to acquire wealth quicker & retire earlier. Control every spend like a leak in your faucet. Every drop adds up over time.
We've been super frugal for over a decade, and it's an important skill in the FIRE toolbox, but it's important to stay balanced.
I'm glad you addressed this in your video. Being too frugal can lead to burnout on the journey pretty quickly if not balanced out with quality of life.
If you get into a relationship with even halfway high maintenance girl or your girl doesnt have her tubes tied plus taking daily birth control pills then forget early retirement or even getting by somewhat financially stable. Young people wont like to hear this at it may hurt their feelings but I'm just giving facts.
@@rejectionistmanifesto8836 Some things are more precious to some of us than early retirement
Back to the bread and butter finance hacks and tips on saving for retirement. Love it!!
That's mind-blowing...making the item pay for itself.
always great tips. Frugality is the new peace of mind.
Great tips. Thank you.
Awesome video and great breakdown! I'm a little different than you as I'm in a job (the army) where I can retire at the age of 43 with 50% of my salary but I have a long term steady side business that I'm growing and trying to scale up. I really like how you broke things down here.
You always offer such thought-provoking ideas with amazing insight into saving and investing...THANK YOU!!
I would love to hear more about your hobby of getting stuff to pay for themselves!
I went over a few. I talked about the internet one but failed at it so I pay for it now.
You're amazing! I was never taught anything about money. Thank you for helping us.
You’re welcome! So a few more people going to retire early because of this video? =D
Don’t have any kids and living frugally is the key to early retirement. I have 2 teenagers living in the Bay Area for 35+ years. Ain’t cheap living here.
There's some point where you're taking it to an extreme
Spending money is a use to save time to focus on being productive. I know people who take it to an extreme and never have time to do anything because they're finding ways to save $5 on necessary subscription. $60 a year is negliable, even considering its future value for something that increases your QOL
In general you shouldn't spend recklessly, but at some point the cost-benefit is negligible. Spend money on high quality stuff you need, but not so much on a car you can't actually afford
Yes. Any extreme is too extreme. We need to be reasonable and balanced. Spend enough and save enough.
Can you make a video on the Antiwork movement?
3:10 beat learns the hustle
Buy shelf stable food like dried beens, rice, etc. in 10 pound bags and loss leader on fruits & vegetebles every week. If you can, get a grain mill and buy a bushel of wheat berries at a local farm. Some even buy animal feed grains but that is a little extreme for me.
"It's a mindset thing"
First of all, you cannot save 90 percent when you get a 35 percent haircut before you get your check.. and the money I saved over the last 30 years just got devalued by about 30 percent.
Depends what you consider 100%.. is this before tax or after. Does it include side income or not?
I find most savings things I already do and my costs are actually even lower than yours where I live. But the issue for most people is increasing your salary so that percentage you talk grows and creating passive revenue. Those are the challenges. And of course, if you have enough money you can invest in low risk and live off of it, naturally.
That graph is really interesting, never occurred to me that it wouldn't scale more evenly, and ramps up so much near the end. I squeaked and squeezed to get mine up to 87% BUT haven't been able to get income much higher, and my expenses will go up once I retire, not to mention everything going through the roof with inflation. The health insurance is crazy and a worry... that's almost as much as housing has traditionally cost me. :O
great video francis
Glad you enjoyed it
Are you planning to do live reactions your video since you make it on cnbc make it on TH-cam. You got featured on cnbc video
Hmmm I’m not sure if anyone wants to see this. If anyone else does, please write a new comment letting me know.
I've never heard of excluding side hustle income from your savings rate. That seems strange unless you don't consider side hustles to be work. If your side hustles are replacing 100% of the income from your job then it sounds like they're your new job unless they're passive
Or you end up making 2x salary.
I wish more people talked about subscriptions. I hate how so many things are going to that model
Recurring revenue is great for a company but bad for the consumer.
A few questions :)
$420 seems really low for housing costs. Property tax, HOA, home owners insurance, and maintenance is only $420 a month for a $1M+ property? No category for general supplies ie non-edible consumable goods? Also curious if car maintenance is pretty much $0 for a tesla?
Yes. Groceries sometimes even $0 as I do purge. With no purge, it’s about $40/week so there’s room to buy stuff with extra. Electronics not included in total budget as they are discretionary and infrequent. Tesla maintenance is $0, but will cost probably $1000 for a new set of tires after about 20k miles as I drive like a madman.
Property tax is around $900a month if you bought the home 10 years ago at around $700K. no HOA on older SFH. Insurance is around $70 a month. Utility is around $125 a month, don’t use AC or heat, otherwise it will cost you $250+ a month, ask me how I know. Car insurance $100 for a middle age dude. Medical insurance $200 a month with deductible. No cable. Grocery for a single dude $400 a month max. Not dating, not married, no kids save you at least $1500 a month. Me 49YO, married with 2 teenagers, living in the Silicon Valley for over 30 years. I know the cost here.
Hi to the little guys 🥰 where's the rest of them? Sleeping lol.
Minimalism. The rest are sold off. A lucky subscriber has my Peas in a Pod now. =D
What percentage of your salary roughly was your mortgage pmi payment during payment times BTB? Currently wondering if my mortgage is too high for my salary!
My opinion is 20% of your take home max. Then another 5% for property tax.
8:30 You mentioned paying for your internet using dividend paying stocks. Why not just use the interest from stable coins when they are yielding 9% as opposed to a dividend stock that could yield 3%-5% and could be volatile in the stock price?
Stable coins is a different kind of risk. It all depends if you know enough about it and confident enough your principle wont lose value.
Precook and freeze your food so you waste zero food.
Frozen too long can expire too. So have to finish eating the frozen food.
@@BeatTheBush
That’s not hard to do.
I freeze about a month’s worth of food. I use 8oz and 16oz reusable deli containers.
No need freeze anything longer than that.
Requires $5,000 deposit... come on man... I guess the old saying still stands "to those that already have everything, more will be given"
Can you recommend any specific dividend stocks that operate how you describe? How do I know if they will pay $500 for my $10k input?
Try goggle's stock screener and use the dividend option. The biggest problem is usually, the higher dividend the riskier the asset.
Research financial advisors in your area. Starting with a simple meeting teaches a lot.
Common index funds pay 1-2% and a real estate one pays 4%. Getting 5% might be difficult or risky, dividend stocks also don't usually increase at a rate the S&P500 does.
I suggest you read Schopenhauer's book The Wisdom of Life
Tip for coffee?? WHAT!
Need to put taxes into this analysis
If you are making $100K you are not spending $90K and saving $10K. The government is coming for you and taking something in the 20s% range. So your net and gross are very different. Need to analyze net not gross. Especially this time of year! (Apr 15 soon!) Thank you!
Not for the purpose of this example. This is only to highlight savings rate. Take home message is savings rate of 70%+ is magical.
What about gym membership? Should you cancel it and just work out at home to save money.
I just do yard work to keep fit. Or run around the neighborhood. Or go hiking.
👍🏻
Did you know add shiba inu add in robinhood. Are you buying some shiba inu too.
Your water and trash are not included in your HOA?
Nope
Some Bay Area condo and townhomes does not include water and trash. They pretty much do nothing except collecting dues.
❤️
You should put taxes and investment returns in your examples, I know your doing it to simplify but it can change the data quite a bit without including those two things.
I think in this case, the point is savings rate and I just decided to make it easy.
Came from cnbc!
Welcome!
what are your thoughts on the two lifestyles though? Living as a cheap beta simp that’ll not have sex often or never have sex at all but being able to retire early living a frugal life, versus living the flashy alpha chad lifestyle and living an exciting life in their 20s, 30s, and 40s, and once chad is in their 50s will be able to retire early living an extravagant life, given that his extroverted personality, outgoing nature, and charisma and confidence allowed him to make the right connections to have the opportunities to make major gains in career, finance, business and investments?
I think being frugal does not always mean being a simp. Being an alpha chad does not always translate to retiring early. Abundance mindset and frugality might seem opposite but both can be done to ensure your success. After all, taken out of context, you can easily have someone spending frivolously and end up broke wondering why more money didn’t come.
@@BeatTheBush hey! That is a good point that you made at the end. How Chad despite getting the major financial gains would end up not on a good position because his lifestyle creeped up too much. Good points!
I like downloading torrents and do it in a country that does not outlaw it. So, I don't have to pay for subscriptions like Netflix and Kindle Unlimited. I just download whatever movies, books, and other entertainment that I want for free. It's one among other reasons why I prefer to live in a developing country. In other countries, some people do it by using a VPN, but there is still a risk if your country outlaws it.
Have your assets pay for your liabilities or expenses. 😎
New Yrok. :-)
Did I do a typo? Ahhhh well I can’t change it now.
You need a subscription for Photoshop?! What a scam!
Ever tried gimp, or other open source ?
Yes. Gimp takes forever for export or a jpg so I pay for Photoshop.
Did you know you can get free cell phone textfree without WiFi. You can get unlimited talk and Text but no data. You can use it burners phone. Have you try it and review it.
Huzzigoinebuddy this is beat the bush
Hello! =D
Dang, $58 a month for car registration? We pay $20 a year
Haha. I upgraded to an expensive car, now I’m paying for it.
I have been working on reducing our expenses for the last 12 months. Don't have any side income because work takes up too much of my mental capacity and burned out at the end of the day/week.
I know the feeling. That’s how you can get trapped at a job. To get out you have to put in double time. 8 hours for them, 8 hours for you.
Lucky you don’t have kids, they want 8 hours from you. More on Weekends.
Didn't you feel you were too cheap in the past?! Isn't it a bit of a waste at some point?
Probably but I wouldn't know the limit without crossing it.
Your internet bill is part of your TH-cam business… write off.
How do you not have a cellphone or landline? 【ツ】
It’s a long story but I use mint mobile, it’s very low price to start but I got a few referrals that paid for it this year.
Live at home until your 30
retire and move out.
easy.
I think your PGE bill is too high. You could share wifi with your neighbor and split the cost. I get free wifi from my neighbor, but i should probably throw some cash his way. How do you not have a cell phone bill? I use a Rebublic Wireless for $20/mo, and don't have/need a data plan.
A fairly recent revelation with being frugal was explained in an excellent book (that I checked out from the library) entitled "Your money or your life", by Vicki Robin, where in she exposed a part of being frugal is not just spending less, but, when you do spend, make a point to fully enjoy it more, ie your spendy coffee habit.
Bulk lego side hustle
I did that one too, it was a fun one off. Get that lego assembly urge out of the way.
Beat the Bush, easier way to retire is just hold tesla stock and bitcoin.
Algo….
??
Dude man maths not real maths, compartmentalization is wasted effort, money is fungible. So much chat just reduce costs and invest wise
My key for me retiring early was getting into crypto in 2017 and just waiting for 2021 bull market to retire. My plan came out right was able to retire last year at age 35. All thanks to Hex coin. Hex was where I made my majority of my profit in crypto.
It's not "key" it's luck
@@thedopplereffect00 lol broke haters are always going to hate
@@efrain11944 I'm not broke, not hating. Just saying there isn't 100 years of profit history, unlike stock market. No point in getting in to crypto now, if Grandma is investing in it, is already to late.
@@thedopplereffect00 lol you have no idea what’s going on in crypto. If you where a nice person and not a hater I would tell you of some gems I have that will give life changing returns. But you are a hater you don’t deserve my knowledge. Stay ignorant
@@thedopplereffect00 nah now is still a good time to buy a few cryptos I disagree but yeah obviously it’s ideal to get in on things early