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My main contra argument isn't that it can't be done, but rather it can't be done like the OP's situation. Ask yourself this: How many of us accumulated $500k (because that's what you'd need in the bank to earn 5% interest for $20k annually in a safe investment) in order to retire before 30? Not saying it's impossible--Zuckerberg can do it right? But I can't do it, you can't do it, go ask 1,000 people and I'd bet 99.999% of those people can't do it.
This topic was discussed to death on SD's forum and it turned out very much the same as here.
If the message is to "live within your means" or "spend less than your income" then everyone in the whole wide world would agree and this thread would get a handful of replies. OP probably knew this and went for the controversial "retire by 30" trolling schtick.
Barring a market crash this year, I will be there by 30 (next year) and even then I am not planning to stop working anytime soon. The thing for me is finding the sweet spot in terms of when to actually stop working. Sure we could stop working now and live for quite awhile on ~$30,000 without making a penny more or even investing it. On the other extreme end of the spectrum, assuming a 5% return in the market over the years until 65, and continuing the same invest like I do now, I could work to 65 and be in double-digit millions.
Neither of those paths is right or wrong. It sounds like the OP would be happier on the cheap side of the spectrum and retiring early with little. As long as they are happy and ok pinching-pennies so to speak, that is OK. It can be done. It would strap tighter than I want, but it can be done and seems to be what the OP wants.
One causes one to live cheap now and forever. The other causes me to work away all my best years to sit upon a huge golden throne once I'm too old to enjoy it. So, for me personally, my wife and are trying to find our "sweet spot" or middle ground. That means cutting out of the work force as soon as we have earned enough to live very comfortably. Not too early to pinch pennies because I wouldn't enjoy life, but not too late that we sit at home accumulating wealth we'll never spend.
It is really, really worth it for people to do calculations to see how just a few years can make a difference. For example, if someone is on target to accumulate 1 million by 35, they could retire and live comfortably for a long, long time, maybe supplementing with part-time or contract work now and then. But, if they worked just 5 more years, they could easily have 2 million. Another 5 years 3 million. If they worked toward work till 50:x, 55:x, etc. But at some point you accumulate more than you will spend. Maybe they would like to retire at 40 with 2 million, but they risk coming out short if they live past 85. It may be worth it to suck it up for 5 more years to cut out with 3 million and be more comfortable. Just something to think about. The options aren't necessarily stereotypical "retirement age or bust." Maybe there is a middle ground.
Most people don't do it just to save money. Most people I know don't consider small home maintenance/lawncare to be work. There's a certain sense of pride and enjoyment that comes from making your house look neat and pretty with your own two hands. I'm sure many of the folks here know what I'm talking about. Standing in front of a fresh cut lawn, smelling the grass and the sense that YOU made your neighborhood just a little better. It's pretty serene.
You can often drive through very nice neighborhoods and see home owners working on their lawn.
If we are talking average folks making $40k, I would say most do their own yard work and if not they probably pay a kid down the street 20 bucks every 2-3 weeks. The percentage of people paying an actual lawn care service probably doesn't reach a significant number until you get into the $125k+ income range.
It seems that you are insinuating that anything done yourself is considered work. That just isn't the case for most people.
Let me give another example that involves less sweat.
Home decorating is something that can take MANY, MANY, MANY hours and days or months of mental focus. However, most women rather fancy picking out paint colors, lamps, trim paint, wall hangings, furniture patterns, rugs, accent walls, feng shui and whatever else. Why not just hire an interior decorator to do it all?
It really depends on the car and mileage. Most modern cars will run 250k+ with minimal repairs. For some, that's 20+ years of driving. Timing belts, water pumps, alternators, etc cost a little, but nothing compared to a car payment.
Like what? 10 seconds changing the air filter? LOL. Seriously, most modern cars are virtually maintenance free aside from replacing basic wear parts.
Well personally, my family in spread out over a huge 50 mile radius....I could darn near ride my bicycle to the wedding.
I'm not just talking about the routine stuff like mowing. Sometimes you need fancier stuff like weed treatment, ant control, etc. and many homeowners who do the routine stuff like mowing, gutter cleaning, and watering themselves will begin to hire outside help at that point. That's what I was referring to in my earlier post. Also, even DIY routine stuff is not free - lawn mowing costs at least gas and lawn mower maintenance and depreciation, for instance. Also heavy DIY lawn work can cause your clothes to wear out sooner, also costing money. Now I'll admit, any SINGLE one of those things seems incredibly inexpensive. But add them all up, and it can cost a fortune much more easily than you think if you han't done the math. Go through 3-5 yrs of bank statements and add up ALL your home maintenance and repairs costs and see the grand total!
Maintenance free car? If you're lucky, sure, but not everyone IS lucky - sometimes cars do act up, even modern ones. Plus, modern ones have complex electronics that have more failure points than cars made a long time ago. And sometimes you have to go to a more expensive mechanic because the usual one can't (or in some cases, isn't legally allowed to) fix the electronics or turn off the "check engine" light. Though to be fair, if you're determined there's probably a way to find someone who will do it even if it's illegal or a Youtube video showing you how
Finally, although many people seem to consider new vs. old car as an issue of car payment vs. repair bills, this doesn't do justice. Anybody who has the cash can get a car payment less than their repair costs if they put 95% down when they buy it, but that doesn't mean it makes financial sense to buy a new car. It means you compare the repairs on an old car to the depreciation of a new car, not the payment!
My family and I live far, far away from the Dakotas so no, I cannot do it. Also, driving a truck is long grueling work. I thought the point is to not have to work.
There are no old mansions where I live, so no... I cannot do that either.
If it is that easy, we ALL would be rich and living off of passive income.
edit: The best plan that I could come up with was to get an education, find a good job that pays well that I enjoy, and hopefully (I can't tell what the future will be like) retire early. Yeah, I'm trading working 9-5 for a family, children, a house, and knowing that *they* are taken care of as best as I can.
I'll never maintain that it is easy to do. My B&B friends worked with few days off for those seven long years. I agree with you that truck driving is not for everyone. It's not easy to be on the road all the time. But just because a person might live far away from the Dakotas, does not mean he/she couldn't figure out how to get to the Dakotas. Though, I would say, if you couldn't figure out how to get to the Dakotas, probably truck driving is not for you.
Getting an education, finding a decent 9-5 job, and retiring after decades of steady effort supporting your family and paying off your student loans is a worthy endeavor. I wish you well on it. Many people have done this and I suspect you'll be able to do it as well.
However, there are other options out there. One is nose-to-the-grindstone at something that pays well for a few years and then living off the interest of what you've accumulated.
What the OP considers the 'good life' is by no means whatsoever the good life for everyone. Not by a longshot. For me...it's small-ball and boring as all hell.
"retire in your 20s or 30s"
Retire implies you've been working, something the OP is being very cagey about. All he says is 'assume a passive income stream yada yada'
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That said...the thread has devolved wildly since the first post.
If this was a thread about frugal living...right on. It can be done and it's laudable.
Methinks also that the OP is fishing for some attention about how he makes his $$$, supposedly.
You can it. But you also asked me to join you, so that's what I'm trying to discuss. How can I realistically join you.
"Assuming your home and car is paid off" eliminates practically everyone in their 20's and most people in their 30's.
You took the two biggest current expenses out of the equation and ignore the biggest future expenses in order to retire early. Of course YOU can do it, you got a lot of money from somewhere and now you can stomach sitting around doing nothing. Your advice on retirement is not practical for most of us as you can tell. I mean... if I have a rich relative that has my name on the will.... or if I suddenly win a million $ lottery... then I would follow your plan. But how realistic is that?
Hell... might as well change it to "Still living at home with my parents. Can I survive on $20k/year?" Of course you can. We all did prior to being 18!
With a little forethought starting in the teens, one can own a home in their 20s. Around here, a 2BR or even 3BR home can be had for $40k in blue collar neighborhood. Someone else mentioned homes around Pittsburgh costing $60k.
Most teens and those under 25 have other priorities than buying a home. Some want a lot of electronic gizmos, fancy cars to impress girls, fast cars to impress guys, expensive clothes, to go clubbing every weekend, expensive trips, etc. Some are also in pursuit of the best college even if it puts them $100k+ in debt.
IMO, the years between 15-25 are some of the most important financially. Every dollar spent should be looked at as a business decision. I know a few people that are paying for the 20s well into their 40s.
Huh? Um no, now it's your turn to learn to read.
I was responding to that other poster who suggested that I find a mansion to renovate and sell for $1million, therefore having money in the bank for "passive income". LTR.
I was not suggesting you find a mansion. I was describing how one couple did it.
However, another friend is searching for a home for an upcoming job transfer. One of the homes available is 10,000 sq. ft. of not-quite-finished foolishness. It has been on the market for a while and cost about what she'd pay for a regularly 2,500 sq. ft. home. She is considering buying the larger home, turning it into a B&B and selling it down the road. There are a lot of tax advantages along the way, plus she gets to live in a gorgeous home.
Running a B&B is not easy. And, of course, there are no 10,000 sq. ft. affordable homes anywhere near where you live. So this would never work for you.
Spouse reminded me of a high school buddy who opened and ran gas stations. He worked hard for about fifteen years and has been living off them ever since. Another high school buddy opened a title company. Worked like a bear for two decades and has been playing golf ever since.
We have another friend who invents, produces, and then sells his inventions. He'll take several years off and travel with his family. Then he hits it again. Don't know what he's working on now, but several inventions ago it was a water bottle with a built-in filter.
But that requires a creative mind, an ability to think outside of the box. Not everybody is up to this.
You seem to have your life planned out and it's working well for you. Which leaves me puzzled as to why you're on this thread.
With a little forethought starting in the teens, one can own a home in their 20s. Around here, a 2BR or even 3BR home can be had for $40k in blue collar neighborhood. Someone else mentioned homes around Pittsburgh costing $60k.
Most teens and those under 25 have other priorities than buying a home. Some want a lot of electronic gizmos, fancy cars to impress girls, fast cars to impress guys, expensive clothes, to go clubbing every weekend, expensive trips, etc. Some are also in pursuit of the best college even if it puts them $100k+ in debt.
IMO, the years between 15-25 are some of the most important financially. Every dollar spent should be looked at as a business decision. I know a few people that are paying for the 20s well into their 40s.
I agree. The 15-25 years set the financial foundation for life. Every dollar spent on tequila shots and iPads is a missed opportunity for living the good life.
eddiehaskell and Ellise - I have to admit, I'm a little envious of y'all.
You remind me of my cousin's wife's brother.
He lives in a little beat up RV near the beach and has never worked more than part-time (painting houses or waiting tables).
Prior to getting the RV, he couch-surfed or even lived in a tent behind the sand dunes.
He's been doing this almost all his adult life, he's in his late 50's and lives sort of a bohemian lifestyle, partying and fishing.
Every time I start to stress about bills and meeting the mortgage I think of him and how it really doesn't take much to live.
Crazy aint it? Most of the population is busy chasing money and buying the next great gizmo, car or house to say "hey, look at me". I'm one of them but I've seriously thought about just trying it. I have no kids either. I've told my wife we live in a 2,500sqft home and only use about 500 of it. Lets go move where we always wanted to and live in a 800sqft home in the mountains and just work a easy job and enjoy life. Right now she works 60+ hours a week and I usually work the same with hardly any days off together.
I'm not just talking about the routine stuff like mowing. Sometimes you need fancier stuff like weed treatment, ant control, etc. and many homeowners who do the routine stuff like mowing, gutter cleaning, and watering themselves will begin to hire outside help at that point. That's what I was referring to in my earlier post. Also, even DIY routine stuff is not free - lawn mowing costs at least gas and lawn mower maintenance and depreciation, for instance. Also heavy DIY lawn work can cause your clothes to wear out sooner, also costing money. Now I'll admit, any SINGLE one of those things seems incredibly inexpensive. But add them all up, and it can cost a fortune much more easily than you think if you han't done the math. Go through 3-5 yrs of bank statements and add up ALL your home maintenance and repairs costs and see the grand total!
Maintenance free car? If you're lucky, sure, but not everyone IS lucky - sometimes cars do act up, even modern ones. Plus, modern ones have complex electronics that have more failure points than cars made a long time ago. And sometimes you have to go to a more expensive mechanic because the usual one can't (or in some cases, isn't legally allowed to) fix the electronics or turn off the "check engine" light. Though to be fair, if you're determined there's probably a way to find someone who will do it even if it's illegal or a Youtube video showing you how
Finally, although many people seem to consider new vs. old car as an issue of car payment vs. repair bills, this doesn't do justice. Anybody who has the cash can get a car payment less than their repair costs if they put 95% down when they buy it, but that doesn't mean it makes financial sense to buy a new car. It means you compare the repairs on an old car to the depreciation of a new car, not the payment!
I don't know - some of your comments make me think we come from different backgrounds.
I don't know anyone that pays for weed treatments or ant control. Lawnmovers cost about $150 and usually last 10 years or more. Not a whole lot of maintenance to be done on them. Gas is maybe $1 per cut. Clothes for yardwork are old gym clothes or 10 yr old jeans/shirts that you wouldn't wear in public.
Check out the service manual for most cars made in the last 25 years. There isn't a whole lot of required maintenance. Sure you may have a few small problems pop up, but there shouldn't be many...perhaps something every couple years. HUGE KNOCK ON WOOD, but 4 people in my family have Toyotas with 225k+. I don't know of any major problems. These aren't car nuts that are crazy about maintenance either.
OP seems to have a much greater aversion to work than many people do. What about ambition and pride in work, some of us have that - UNRELATED to materialism. And for a lot of people, that satisfaction comes from a regular job that requires full time hours. OP almost seems traumatized by the idea of full time work, there is a deeper story here. Some people have bad experiences but don't assume everyone shares that.
Re materialism, "stuff" ain't all the same. Someone who loves photography may want to buy the best camera equipment which is very expensive Stuff. A person may want to collect things they love, a person may want extra space in their house for a neat game room to have gatherings with friends. How about those "man caves", is that so horrible and materialistic for a person to have his or her own space for his or her own hobbies? Money is spent on those hobbies. The minimalists talk about travel, why is that acceptable to spend on, it also requires money even if you travel light. Cheap travel is more dangerous than for instance staying in a resort, bad things can happen in many parts of the world if you take risks.
It is very annoying for anyone to attempt to dictate how much money or space a person "needs". Maybe people just want more space for their own reasons, maybe they enjoy the space as much as you enjoy traveling and not working. Maybe they enjoy their Stuff, their sports cars that are so fun to drive, just like a hippie loves his surf board (surf board is Stuff).
I would not encourage a person to be inauthentic, so enjoy those tiny houses and fighting with the girlfriend over what lights are good or bad. There is no need to try to convince ambitious productive working people they hate their lives because you hate their lives.
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