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How Anyone Can Retire at 32

How Anyone Can Retire at 32

While this may sound like an outlandish statement, this goal remains more than achievable in 2014.

“Sure,” I can hear you say, “you could win the lottery, for example, or inherit a financial windfall from a beloved and wealthy relative.” Each of these eventualities may enable you to retire immediately, while also negating the need for you to ever work again.

While this is true, such a goal can also be accomplished through hard work, frugal living and sound financial planning. This is why early retirement is an option that remains accessible to everyone, although whether you not you choose to chase such a dream is entirely up to you.

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Retirement Age

    Leading by Example: A Template for Early Retirement

    In order to illustrate how this is possible, I will be using the example set by a close family friend of mine. He is now 33 and officially retired last year, although he still likes to invest some of his hard-earned income into profitable ventures and schemes. He no longer works for others, however, and nor does he operate full-time as a freelancer or independent contractor. This is a dream that he pursued relentlessly and strategically from the time when he was studying at university, as he decide at the age of nineteen that he had no desire to work full-time within a soulless corporation.

    The exact inspiration for this life goal is unclear, although he was obviously influenced by the experience of his parents. They toiled hard for an entire generation; retired in ill-health at 65 and barely had enough money to live the comfortable life that they deserved. He drew great inspiration from this, and vowed not to give so much of his life in pursuit of such intangible returns. Instead, he developed a clearly defined and fast-tracked plan for financial independence, which would begin in earnest at the age of 22 and ideally end with his official retirement a decade later.

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    As he was studying marketing, he initially decided to combine his studies with freelancing as a content writer and online consultant. He started during his second year at university, and spent 9 months or so developing his reputation and working for relatively low levels of remuneration. In year 3 he increased his client range and fees, however, and set out to earn £48,000 per annum after taxes during this 12 month period and repeat this throughout the following decade. While this figure was conservative, he would at least be able to avoid VAT liability and higher tax rates in the process.

    Execution and the Importance of Frugality

    In real terms, this plan translated into spendable income of roughly £4,000 per month. This is where the execution of the plan came into play, as he deemed it realistic to save an estimated 70% of this monthly income into a high-yield savings or investment account. The remaining 30%, or £1200 in simple terms, would be used to live on and settle all outstanding bills. This worked seamlessly during his final year of studying, and by the end of this, he had managed to save an annual total of £33,600 at a generous interest rate of 8%.

    Once he had left university, he found it far more challenging as he faced a constant struggle to keep living costs down. Although having just under £15,000 per annum to live on is far from ideal, he felt that his ability to adopt a frugal lifestyle would ultimately determine whether or not this could be done successfully. So he quickly began to minimize costs, initially by moving back in with his parents temporarily and accessing real-time promotions to cut everyday costs, such as food, beverages and those associated with energy consumption.

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    As the years progressed and he continued to hit his savings targets, so too he developed even more frugal living measures. These included embracing the thrift market, and investing in second-hand clothing and accessories. He also decided to travel exclusively on public transport, even cycling or walking where routes and distances permitted. Over time, his seemingly far-fetched dream became an actionable and strategic plan, which quickly evolved thanks to patience, discipline and an ability focus on a single-minded goal.

    How to Use This Lesson to Fund Your Own Retirement

    By the age of 32, my close friend had managed to save £33,600 at a fixed interest rate of 8% for 11 consecutive years. This had created cumulative savings of more than £520,000, which could then be used to fund his retirement and achieve life-long financial goals. Almost immediately, he plowed £150,000 into a modest but functional home of his own, and distributed £300,000 across various investment savings accounts with interest rates with variable risk and interest rates of between 6 and 8%. He then used the remaining £70,000 to create an investment portfolio that included shares and other derivatives, and strived to turn this into incremental profit over time

    He is now enjoying the fruits of his labor, and lives comfortably while having the power to determine when and how he invests. This is a template that can easily be followed by anyone, although each individual must apply their own interpretation and translate this into a retirement plan that suits you. It is imperative that you visualize your retirement and determine exactly what you want from it, before implementing a viable time frame and actionable strategy. You may not wish to invest your capital once you have officially retired from work, for example, which means that you may need to save for longer and create a large fund to live on.

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    Another key lesson to learn is the importance of frugality, which is crucial if you are to turn a seemingly fanciful vision into a realistic and achievable goal. As this example proves, early retirement of any description is only possible if you remain focused and are willing to make significant sacrifices with regard to your lifestyle, as otherwise you will be unable to save the requisite amount for the required period of time. Without a commitment to frugal living, you will be forced to work longer and delay your individual retirement plans.

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    Published on November 11, 2020

    10 Best Ways to Save Money Faster and Smarter

    10 Best Ways to Save Money Faster and Smarter

    People love to talk about budgeting, reducing spending. and investing. But unfortunately, talk is cheap, and poor money management is expensive. It’s easy to talk about the best way to save money, but putting it into practice is a different thing.

    What people need to talk about is the practical and efficient ways you can quickly save money to accomplish your goals. After all, they don’t teach this stuff in school.

    Here are the 10 best ways to save money faster and smarter.

    1. Cancel All Your Subscriptions

    Yes, all of them.

    Okay, you can keep your wifi and trash. But other than that, cancel all your monthly subscriptions for one month. You will survive, I promise. Better yet, you will realize you won’t miss all of them.

    Now that you have had 30 days to examine what you really missed and what you never thought twice about, you can add some of them back in. The others? you never have to think about them again.

    This is something you can and should do with every part of your life. If it’s clutter, cancel it. Being able to step back and see what is cluttering your life and what is excelling your forward helps improve your quality of life and financial standing.

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    2. Automate Savings From Your Paycheck

    Many of us are so excited about getting a new job that we rush through the paperwork during the hiring process. Good news for you, I have had lots of jobs so I have seen it a million times.

    There is an option for a portion of your paycheck to go directly into a secondary savings account. This is by far the most effective way to save money every month. We tend to spend most of what we have. So, if we take it off the top first, then it’s less likely to be spent. Just head over to HR and ask. It will only take two minutes.

    3. Cancel the Happy Hours for the Rest of the Pandemic

    We are in the middle of a global pandemic, which means that there is no better time to buy some drinks from the local store and stop shelling out $5 a drink at the local cocktail bar. When we look back at our bank statements, we are always shocked that fast food and alcohol can add up so quickly. You can easily save a couple of hundred dollars just by taking this step.

    A great exercise is to print out your last bank statement and highlight all the areas of alcohol and fast food. The amount may surprise you and make you think twice about that old fashion.

    4. Online Grocery Shopping

    Some people think online shopping increases the amount they spend. For the most part, I would agree—except for this category.

    Online grocery shopping is now a no-brainer, though. Whenever you walk through a grocery store, two things always happen: you always grab impulse items, and you never know the total of your cart until you checkout. This means that we always spend more than we originally planned.

    With online shopping, you can see your total as you add items to your cart. You are way less inclined to make those impulse purchases and because of that, I would venture to say that you could even pay to have them delivered to your door and still save money each month by choosing online grocery shopping.

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    5. Get a Famzoo Debit Card

    This is something my wife and I swear by, and it’s great for the entire family! Famzoo strictly exists to help families and kids budget their money better. Each month, my wife and I have an allotted amount loaded onto our pre-paid Famzoo debit card. This amount has changed every year depending on promotions, kids, stage of life, etc.

    The important part is that when you give yourself the freedom to spend a certain amount, you are more likely to only spend the allotted amount. Think of it as a diet. If you are counting calories, you are more likely to stick close to the amount you set. You can also look for some tips online to better stick to your family budget.

    6. Purge

    This is actually my favorite to do, and it is actually one of the best ways to save money. Raise your hand if you have ever moved. Okay, so everyone.

    When we move, we are always amazed at how much junk we have acquired. I have found that about every 6 months, I can find a couple of boxes to sell online of things that we never use. This not only gives you so extra quick cash, but it also keeps your house more tidy and organized.

    Now, go clean out that garage!

    7. Amazon Subscribe and Save

    32! That is how many items I have setup on amazon subscribe and save. Let me explain.

    This sounds expensive, I know. But it actually saves us hundreds of dollars per year! We all need toothpaste, shampoo, razors, laundry detergent, toilet paper right? This feature is truly a triple threat. When you have more than 5 items on subscribe and save, you automatically unlock the max savings for every product on your list. This can be up to 20% per item!

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    Now, even better is that it ships straight to your door on the exact day you want the item, maybe monthly or maybe you only need it every 4 months. This way, you never have too much or never run out. Either way, it’s totally customizable.

    Lastly, there is no contract for any items, which means you can switch brands or items at any given time at no cost. My advice: every single staple item should be on your subscribe and save.

    8. Rewards

    This may ruffle some feathers, but if you are using your debit card for purchases, you are missing out on free money! We have this notion that credit cards are evil but in reality, they are the same piece of plastic as your debit card.

    How you use it can be bad, don’t get me wrong. But if you want my opinion though, ditch the debit card and get a rewards credit card. Use it just like you would your debit card and make sure to pay it off as soon as the statement comes in!

    Just to give you an idea of how powerful this can be in terms of money, here are some things that our miles have paid for:

    • 4 nights in Vail with Flight
    • Rental car in Vail (convertible might I add)
    • Flight to Ireland
    • Flight to Hawaii
    • Multiple staycations at very nice Hotels

    That’s roughly about 7 thousand dollars in travel expenses so far! Remember that the credit card is just a tool and can be one that benefits you if you use it wisely. Ironically, this can be an effective way to save money.

    Pro tip: If you don’t trust yourself carrying around a credit card, then set up all your monthly bills with your credit and leave it in a drawer at home. This way, you rack up miles but don’t get tempted to overspend.

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    9. Vacation With Friends

    Now, I know travel is hard right now but what a perfect time to go grab an Airbnb in the woods with a couple of friends and detox from the world right now!

    Vacationing alone can be pricey and get rather boring quickly, but if you split lodging and set out for a road trip, it can become affordable quickly! For a couple of hundred bucks apiece, you can have one of the most relaxing vacations ever. Don’t forget to pick up your food at the local grocery store to avoid eating out every meal!

    10. Make a Budget

    When is the last time you updated your budget or made one for that matter? Making a budget is like writing down your goals. If you don’t make a budget, then you will struggle to save.

    How can you know if you are spending wisely if you are not tracking everything?

    Our advice would be to get a finance app like Mint, Every dollar, or personal capital. All these apps are free and do a tremendous job of tracking spending and budgeting. I still am old-school and have an excel spreadsheet which I do highly recommend.

    Work Smarter, Not Harder

    The entire goal is to boost your bank account while reducing the effort required. Efficiency is the name of the game, and automation is the key player. Luckily, we live in a world that has more perks than we can ever take advantage of. But if I were to choose a few, it would be the ones above.

    Taking on all 10 of these steps may seem a little daunting. You can first try to pick three of your favorite and start there. Saving money doesn’t have to be a chore as long. As we use the tools correctly, it can be quite effortless. And now, you have a great blueprint to get started!

    More Tips on Saving Money

    Featured photo credit: Sharon McCutcheon via unsplash.com

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