How to retire in 10 years by being frugal
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[This is a guest post by Nelson Smith who blogs over at Financial Uproar.]

There’s an expression I like. I have no idea where it came from, but I like it.

“Retirement is wasted on the old.”

I know a guy who recently retired, at the relatively young age of 60. He’s still young enough that he likes to travel a bit and can still mostly keep up with his grand kids, but he still doesn’t do a whole lot. His days are spent lounging around the house and watching TV. He just doesn’t have the energy that a young person does.

Which is why working all those years is for suckers. Is it actually possible to retire in 10 years? I think you can. It’ll take hard work, sacrifice, and perhaps a little luck, but it’s possible.

Here are the 10 steps you’ll need to take if you want to retire in 10 years:

1. Embrace Cheapness

Forget frugality, you’re going to have to get downright cheap.

By forgoing luxuries like your smartphone, cable TV, and other expensive electronics, you can put $50-$100 per month back in your pocket. Learn to embrace the public library, events with free food, and the great outdoors. You’ll only want to spend money on the bare necessities.

2. Minimize Housing Costs

In the United States, the average mortgage payment will set you back about $1,000 per month. If you’re looking to be an early retiree, you’ll have to cut that by a lot.

This is a good time to be creative. Rent out a room in a buddy’s house for cheap. Buy a cheap RV and live there. If you’re really adventurous, you can stay in a tent somewhere. There are all sorts of creative solutions.

This isn’t going to be easy, but saving $1,000 per month on housing will net you more than $120,000 after a decade, before interest. That goes a long way towards early retirement.

3. Eat Cheap

Don’t even think about eating out. Even the dollar menu is too expensive for an extreme early retiree.

Instead, embrace foods that cost less than a quarter per serving. Beans and rice should be a staple, and both ramen noodles and spaghetti are cheap and tasty. You can buy day old bread at a big discount. Assuming you’ve got the space, a garden is a terrific source of cheap greens, and you can freeze your harvest for months afterwards. With a little planning, you can save at least $200 a month on food.

4. Enjoy Tap Water

Even if you drink at home, you’re looking at a minimum of $1 per beer, and fancy coffees at Starbucks will set you back at least $3 a pop. These drinks are too expensive for someone looking to retire in 10 years.

In most places, tap water will set you back a fraction of a penny per glass. Even if you’re living somewhere without access, most places will have somewhere you can easily fill up a bucket for free. Assuming this saves you $4 a week, that’s over $2,000 saved over a decade.

53 Miles Per Burrito

“53 Miles Per Burrito”

5. Human Transportation

If you asked most people to rank their highest monthly expenses, most would rank their car as number two, right behind their house. With a little planning, it’s easy to make due without a vehicle.

Taking the bus is the obvious choice, but most cities charge about $100/month for a bus pass. Walking will only set you back a pair of shoes about once a year, or riding a bike will only cost a few hundred bucks as an initial investment.

The cost savings on this are huge. Assuming your car currently sets you back $500/month, you’ll save $60,000 over a decade by going without.

6. Maximize Income

Considering how this lifestyle won’t attract you many friends, feel free to put those hours into working.

If your job offers you overtime, work every minute of it you can. Eventually, your boss will notice, and you’ll be the next one promoted, which will lead to even more money. This is the kind of trend you want to ride.

If you manage to increase your income $3,000 per year for a decade, that alone will go a long way towards funding your early retirement. As long as you don’t let lifestyle inflation eat away at those raises, you’re golden.

7. Side Hustle

Assuming you can make a mere $7,000 per year extra, you’ll put an additional $70,000 in your savings towards your early retirement. And that’s not even including interest. Making $7,000 per year isn’t easy, but it’s certainly possible.

8. Couple Up

It’ll be difficult to meet someone with the same mindset, but once you do, the potential savings can skyrocket. Imagine your special lady contributing $50,000 per year of savings towards your early retirement? Sure, you’ll have two mouths to feed, but it’s definitely more efficient for two people to live together.

9. Invest Like A Boss

They say if you invest in the stock market, the market will return 8% annually over the long term. You’ll need to do better if you want to retire early.

The most common way to do this is via real estate. If you live cheaply enough during your decade of saving and use your accumulated cash to buy and pay off a half dozen houses, you’re laughing. If each of those houses rents out for $1000 a month after expenses, that’s enough to keep most families going.

10. Don’t Give Up

The final step is to maintain your crazy lifestyle once you do retire. Feel free to let your hair down a little, but you can’t go from extreme cheapness to living like a lottery winner.

Assuming you follow all these tips, I think it’s very possible to go from a zero net worth to becoming a millionaire in just a decade. But if you’re going to try and make a million bucks stretch out for 50+ years, you’re going to have to keep the spending down, just in case.

It might not be an ideal retirement, but its certainly possible. It’s up to you to determine just how badly you want to throw off the shackles of the working world for a lifetime of freedom, shuffleboard, and dinner at 4 PM.


Afterword From Brent

I have got to say that this sounds like it would be an awful decade and I’m not sure living through this for the next ten years would be worth early retirement.

I’m not saying it couldn’t or won’t work.  I’m just saying that this lifestyle is not for me.

I prefer to focus my efforts on making more money through side hustles, investing in real estate and other businesses so I don’t have to every consider living in a tent for ten years.

Cutting your expenses to save a lot of money is great, but it can only go so far.  The other side of the ledger, your income, theoretically has no limit.

If you’re looking for ways to make more money check out the Make Money Monday series, the Make Extra Money page and the post I wrote for Budgets are $exy where I shared how I made more than $10,000 running a business from a shoebox.

Photo Credits: Stephen Depolo | Anita Hart

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