Excellent questions: 1) There has been adjustments, such as cutting out fast foods and eating/drinking out. Also, I delayed purchasing a new computer by a few months (paid with my tax refund). Also, I am stingy with using my car, and I am more apt to carpooling whenever I do go out (a generally rare occasion). I have cut out alot of impulse purchases. For instance, I would buy a $1 package of gummy worms around four times a week. Gone. Lastly, I pack a lunch for work each day. Nothing too big, just several small habit changes. This lead to aot of excess cash. It became really easy to do these changes since I transferred my cash at the beginning of the month, and forced myself to live on the remainder. All these changes have been for the better, and I have not notice a real decrease in happiness or satisfaction. It would be pretty ridiculous to expect my satisfaction to go down because of less fast food and candy in my life.
2) I do not know for sure that I will enjoy not working, and I can certainly see having "mini-retirements" of Tim Ferriss. As of current, I do not have any particular attachment to my jobs now. This may change in the future, and I hope it does. Post-retirement, I do not plan on sitting on my butt watching TV, going to the golf course each day, or moving to Florida and sipping alcoholic beverages on the beach. I will have projects to do (I would like to build a house, exercise more frequently, and run a psychology laboratory) and if I receive income for those things, I will be glad to. Most importantly, I hope to have a wife and children one day, and I hope that I will prefer to spend time with them over working.
3) This is pretty murky. I am currently severely underemployed, and in a recovering economy. I am completing a course in webdesign, then doing another one for programming, and that will translate into new career opportunities. I may move, and have my expenses go up, I will pay my student loans ahead of schedule, and lower my expenses considerably. And I may get into a serious relationship and start a family. That may slow it down, but if my potential spouse shares my vision, we may wait on children and in fact may speed up the timeline to retirement.
All together, I think my income will outpace my expenses. One of the links above, here, gives a straight forward chart comparing your savings rate to the number of years till you are able to retire (presuming average returns, and living off the interest alone, not touching the principal at all). I am at 65%, putting me at 10.5 years, or 34 years old. I think my expenses will end up increasing in the shorter term, then my income will catch up, before my student loans drop out of my life forever, freeing up another $500 or so a month. My ideal situation would a 75-80% savings rate, allowing me to retire before I'm 30.
All said I think I will retire by age 35 with 65% confidence, age 30 with 10% confidence and age 40 with 80% confidence. My income prospects in the next year and my spouse are the biggest factors in determining my success.
Does MMM take into account the cost of time spent saving money? For instance, it seems to me that trying to eat as cheaply as possible involves a lot of time spent going to different shops and finding the best deals. It might be better to spend that time working more or gaining further qualifications so to improve income in the future.
The past few days have seen an increase of chatter concerning retirement and financial planning. One of us is even putting out a prospectus for a rational financial planning sequence. Some others have derided the concept of saving for retirement, as there is a probability of death before that time.
I am of the Extreme Early Retirement group. The idea is to save and invest 60-90% of your income, and you will have enough money to retire within a decade rather than four decades of the normal working career. This requires you to exercise your frugality muscle (such as cutting cable, biking to work, eating out less), but due to hedonistic adaptation, you will come out no less unhappy.
The sequences have already spoken on how spending money does not make us happier (after our basic needs are met). A Rational Financial plan should take this into account, even if a majority of people would not want to consider it.
I am just a beginner, so I linked the two big names in EEA, Mr. Money Mustache and Early Retirement Extreme. You can find their journeys towards financial independence here and here.
ERE is an austerity heavyweight, while MMM lives a pretty luxurious lifestyle, but still spends much less than his former coworkers. He just spends on what is important to him, such as travelling with his family and eating organic food, and not on anything frivolous, such as cable or eating out. He lives very far from a deprived lifestyle which the average person would shy away from. It takes a paradigm shift and some grit, but the people of LessWrong are not the type to reject munchkin ideas because it takes a little bit of mental effort.
If I were to make a compilation of posts for a Rational Financial Planning sequence, it will go as such…
How Little Money you need to Retire ?
Basic Retirement Math
Rationalist Spending
Maximizing Utilons per Dollar
Utilons Free Of Charge
Investing Rationally Basics
These are just the basics. Investment advice is scare, and the above does not talk about many fianacial aspects, such as insurance, children, career choice. The authors do speak about them on their blog’s, but I omitted them for brevity. Read and follow these posts however, and you will be better off than 90% of your peers, and well on the road to Extreme Early Retirement.
[Edit] This idea of cutting your expenses and maximizing your savings obviously do not apply only to early retirement. Other financial goals, such as saving for a house, building up capital for a business, or giving more money to charity all will be more quickly accomplished if you learn to cut excesses from your life. The driving idea is the cost to live is very small, you are not made any happier by spending money on the extras, and you should put this money where it matters to you the most.
Petruchio