Picture a life of working when you want, and not because you must. Imagine traveling the globe and never sitting in another cubicle. That’s what FIRE means: “Financial Independence, Retire Early.” And there’s a whole community of people living their lives just like that.
So what’s the secret to being able to retire early? Three things:
1. Start Now
The thing with people who successfully retire early is that they prepare early. Most of us have the mindset that retirement is a long way off, but it doesn’t have to be.
We can “retire” today and live life on our terms, but it requires starting today. This may mean opting for savings rather than drinking, and investing over weekend dancing — for now.
2. Save as Much as You Can, as Fast as You Can
The second trait of those who retire early is that they pay off their debt as fast as possible and then save as much money as fast as possible. Delaying paying off debt can delay early retirement, even to the point that it’s just retirement. That’s because high interest eats away at our income. Paying off your debt can increase the amount of money you can keep by tens of thousands of dollars per year.
Once you’re debt free, save rather than spend your money. When we have more cash to spend, we often spend it. But if your goal is to retire early, save your money for that goal rather than temporary pleasures. The more automated and out-of-sight your savings, the better.
3. Acquire Assets to Increase Your Cashflow
After you start saving the money you worked so hard for, start making your money work hard for you. That means investing in assets that generate interest to pay for your early retirement.
More specifically, invest in the stock market, invest in real estate and start a business. With the internet and the gig-economy, there’s never been an easier time to start a business. To calculate how much money you need to retire early, use this simple, six-step calculator.
To learn more about financial independence and retiring early, listen to this episode of Queer Money: