Ok, I live a fairly good middle class existence. Granted I’m a bit lower of the bill than most people, but overall I still have a nice house, a flat screen TV, car and some nice clothes. Generally I blend in fairly damn good with the neighbours other than I really don’t care to spend money on things they care about more than I do.
Yet if you are desperate to retire as early as possible you have to accept the fact to achieve a very low spending rate some of the core elements of a middle class life likely need to go out the window. Here are a few potentially huge cost saving ideas.
- Housing. Let’s face it this is you biggest expense, so being careful here can save tons of cash. Consider either sharing living space with someone (ie: share an apartment/condo or rent out the basement of your house) or buying a very small house to begin with or do both. Housing prices are fundamentally tied to the amount of square feet you owe so buy as small as you can handle and save the expense and the mortgage interest, not to mention property taxes. Hell you might even want to consider a trailer. Potential savings: $250 to $1000/month.
- Transportation. Cars are bottomless pits of money, so if you can get by without one you could be saving a large amount of cash flow. Also consider having a bike for the nice weather and public transit for the not so nice weather. You might also want to look at car sharing. Potential savings: $100 to 400/month.
- Food. Meat is good tasting, but expensive to base a diet on. Even if you cut you meat eating in half that is a fair amount of savings. Also consider stop buying as much pre-fabricated food as possible and dropping your cheese consumption to a minimum. Think eating more vegetarian than anything else. Potential savings: $100 to 500/month.
- Booze. Skip this entirely or reduce it to a few times a year or perhaps limit yourself to brewing your own. Another idea is to never buy booze when you are out for dinner. Potential savings $50 to 100/month.
- Hobbies/Entertainment. You hobbies should ideally have a zero cost/almost no cost or better yet turn a profit. Your entertainment ideal would cost you almost nothing like having people over for supper or borrowing a movie from the library. Eating out would be a rare treat. Potential savings: $200 to $400/month.
So if you add them all up you can reduce your monthly spending anywhere from $700 to $2400 which would represent a retirement saving reduction of approximately $210,000 to $720,000 (using the 4% rule). So yes, being different and not living the standard life does care some serious benefits when it comes to early retirement planning.
Now you just have to figure out which if any of these changes you would like to make to your own life. I suggest if you are going to do any of them try living in a smaller house. It’s a bigger cost savings and has the nice benefit of you can’t buy as much stuff to fill the house with. So your savings even are higher than what I put in for a range.
If you have another idea please share with a comment. Also note I just guessed on the range of savings based on previous experience with other people’s spending habits.