Going galt via financial independence and early retirement
Posted by mroberts943 9 years, 3 months ago to Going Galt
I happened across a financial blog by a guy who retired at age 30. What struck me was this: he had a college degree, but no money when he started out. Married at 25, ,parent at 30...and retired. He and his family live in a very nice house in a very nice location, on $25,0000 a year. Basically, nonexistent taxes.
This seems to me to be a good way many folks who want to can go galt. I've rearranged my finances, cut unnecessary spending, and am planning to retire next year.
My total effective tax rate should drop from near 50% to below 10%.
check it out: http://www.mrmoneymustache.com/
This seems to me to be a good way many folks who want to can go galt. I've rearranged my finances, cut unnecessary spending, and am planning to retire next year.
My total effective tax rate should drop from near 50% to below 10%.
check it out: http://www.mrmoneymustache.com/
The basic idea of the author of the MMM blog is that it is possible to live forever on savings equal to 25 times your annual spending, (or 4% of your savings) once you have saved up that much. For his wife and him, that meant paying off their mortgage and accumulating $600k in savings, then living on $25k/yr (with a paid-off mortgage).
Personally, I'm not that frugal. I like to travel and my wife and I have some bucket list travel goals. So, whereas Pete (MMM) and his wife can live comfortably on $25k/yr, I am shooting for $40-50k/yr.
Fortunately, at age 60, and with nearly 30 years of saving 15%/yr plus mostly paying off the mortgage, I've got enough to retire and count on around $65+/yr now without dipping into principal, and will see that annual amount available increase to $90+/yr when SS kicks in in six years.
For younger people (like my two kids), Pete's advice is basically to live on one income (for a married couple) and save the other (or live on 50% if you're single).
It's not just about being cheap, part of the philosophy is our happiness is more about working toward and achieving goals, not about buying and accumulating stuff. New, shiny toys may bring happiness for about 72 hours, then it's just more stuff to maintain, dust, store, walk around, etc.
So, we looked around and decided we could cut our annual, non-conscious, convenience spending from around $90k/yr (including mortgage) to around $36k/yr (after paying off mortgage). That's what we've done in the last five months.
I should also add that retiring--at least for Pete (MMM) and for me (right now, at least)--doesn't mean not working. It just means getting to work on what I want to work on instead of what my current employer wants me to work on. For me, that means I get to completely cut out all the administrative bullshit I took on about seven years ago and can work on the research and writing that I haven't been able to get to for years. Plus have time to travel, photograph, and do some other cool things I haven't had time to do in years. So, this is similar to the characters in Atlas while they were in exile--do the work that is important to you, on your own time, at your own pace, outside of the rat race.
I empathize with the dear wife situation. My first wife was like that; fortunately, my current wife shares my values.
The MMM blog and forum has a lot of discussion and articles about this. As I recall, the persuasion point usually is around reducing unnecessary spending in order to reach goals that have more value--like having time to do things together instead of being apart working for years. The key, really, is to find what makes you both happy and rearrange work, spending, whatever is in the way in order to increase you and your mate's happiness.
Again, it's not just about being cheap, but more about learning what really makes you happy. Too many of us fall into the trap of convenience spending and lose sight of the fact that doing something ourselves can bring more satisfaction than just buying something or paying someone else to do a job.
I got interested in the "voluntary simplicity" movement a few years back, and that contributed to my own semi-retirement at 53. I now work as a consultant, from home, and typically only when I choose to.
The term "financial independence" is thrown around a lot in the VS movement, but there is a wide variety of what simplicity means to different people.
I see some similarities between "going Galt" and the simplicity movement, and there are others here who have expressed some similar attitudes, but none I've found so far who embrace the voluntary simplicity label.
I'm interested in your journey toward early retirement, and look forward to hearing more as you get closer to "pulling the plug".
I agree simplicity can mean a lot of different things. It's a personal journey. My wife and I bought a house built in 1968 about 12 years ago. Nothing had been done to update the house and we have gutted it and done a lot of the updating ourselves. For the first 7 years, she kept openly wishing it would burn down and we could build from scratch, but in the last 5 years, after the third round of renovation, she loves it. Some people can do this kind of stuff, some have no interest in it.