This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
I read an amusing post written by a personal trainer a little while ago, entitled F%&$arounditis (there is a bit of strong language in it, but I would recommend it highly to anyone interested in physical fitness). In the article, the writer attacks a lot of the commonly held conventions having to do with physical fitness and makes such points as “F%&$arounditis is a behavioral disorder characterized by a mediocre physique and complete lack of progress, despite significant amounts of time spent in the gym.” As well as The onset of symptoms typically occurs in young adulthood and may go undiagnosed for a lifetime. Diagnosis is set by a professional and based on observed behaviors and physique progress.” He continues on, stating that unless you are seeing measurable gains in strength over the long-term – you’re essentially wasting your time.
To a certain extent, the same kind of premise can be applied to an early retirement plan. People outside of the “Early Retirement Community” can be seen as the individuals who keep going to the gym and achieving nothing at the end of the day – by spending almost exactly what they’re bringing in, they are no better or worse at the end of the year. An individual with a goal of retiring early is shooting for the big gains similar to weight lifters who increase their squat, bench press and deadlift by 100% over a year or two.
The earlier an individual wants to retire the less “messing” around they are able to afford. For someone who wants to retire in 5 years (like Jacob from Early Retirement Extreme), there is little leeway, you need to save around 80% of your pay and cut your living expenses significantly in comparison to even the most frugal individual. With a larger window of 15 years (like my own) the savings rate is lower, and the annual budget is probably higher, allowing for some “messing” around (like a vacation to the Dominican, which I am going on in 12 days).
Someone on an early retirement stream, much like the individual at the gym looking for strength gains will methodically track their progress and stick with the long-term plan. People on an early retirement plan may track their spending to the penny, have a very specific budget and a very strict savings plan. Contrast this type of planning to someone not involved in early retirement – generally, these people don’t know where their money has gone at the end of the month, they just know it’s all gone.
Do you have a plan that you methodically track and stay with to achieve your financial goals? How about with your personal fitness – do you have a plan to get into or stay in shape?