Have you ever experienced this? You decide to go on a diet or start a new exercise regime, and immediately there's that one friend who comes out of the woodwork to tell you about all the times they tried (or someone they know tried) and failed at it. While hopefully not malicious, the story is told to you to point out how hard it is. Is it motivating?? Absolutely not! Is it aimed at encouraging you or inspiring you to be your better self? Nope. So why do people do this??
It's a mystery to me, but lately this has been happening when I've been chatting with people about our long-term goals (yup, I've turned into that person- but only when people ask about the blog!) of paying off our house early or trying to re-think the two 40-hour-a-week jobs. I do appreciate that a few years from now we may have a major shift or change in our perspective of how we want our lives to look. The things is- I don't see being debt free and financially independent as goals I want to grow out of or toss out the window. I think it's here to stay.
So what's the most asked question that get's thrown my way these days? Here it is:
This is such a common one, and is built on misconceptions! Saving and retirement is not just about income. Don't get me wrong- if you don't have an income, you can't save money- but don't let your income define who you are. You do not need to be making 6 figures, working 60 hour weeks in order to save for retirement. Truly, it's about expenses and how you choose to live your life. An example: basic retirement advice is that in order to retire in your 60's you need 8x your annual salary. This assumes a few things about you and your lifestyle, the most major of which is that it assumes that you will need 80% of your annual income in retirement. This is a common assumption, based on the fact that most people spend about all of their income on their expenses. If that's the case the 8x your annual salary is a good way to ball park your retirement number (or what you would need to have saved before you retire).
BUT...what if your spending rate is lower than 80% of your income? Spoiler: you don't need to save as much for retirement. Another way to think about it is how much your yearly spending is. By determining your retirement 'number' off of that figure your number may be lower then traditional wisdom would suggest. This would likely be much more accurate- as it takes into consideration what your actual lifestyle needs are.
The math is actually very simple when it comes to saving- it's the saving that's the hard part! I recently have been loving this blog- Go Curry Cracker. The author simplifies things even more, 'if you save 10% your income for 9 years, you can not work for 1 year and still support your lifestyle. If you save 90% of your income for 1 year, you could not work for 9 years'. I'd take a 9 year sabbatical- would you?
So if the math is that simple why are there so many wealthy people who can't retire early or even seem to save? It goes back to lifestyle habits. I know people who live in our neighborhood, in reasonable sized homes, with used vehicles that probably have portfolios to put mine to shame- and I know others with large houses, generous incomes who barely pay their bills on time. I bet if you thought about it- you know people like that too.
With reasonable expectations, good habits, and some good luck in finding jobs that meet our needs, the Frugal Rock home is trying hard to stay on track with our spending/saving goals! And if you were wondering- there are A LOT of success stories out there from individuals who worked hard to become financially independent and chase their dreams. Here are a few of my favorite blogs on them: