3 Lifestyle Changes to Consider if You Want to Retire Early

Note: if you are content with your 9-5 work life and want to work until you are 65+, then this blog is not for you.

As you will get to know about me, I am a firm believe that the 9-5 work day until you are mid 60s with only a few weeks off per year is not an ideal lifestyle. I believe that this whole work craze was born out of a culture of materialism and now it has become the “norm”. Well I don’t plan on that being the norm for me and I want you to be able to break free of this as well. So here are some pointers to get you on the track to early retirement.

1. Refine your dining habits

How often do you eat out? Maybe you grab lunch with your coworkers or buddies a few times a week. Or maybe you eat out for supper many times a month. Perhaps you run out of time to cook most evenings so you grab take-out. If you are like most people, chances are you are eating out way more than you should. If you want achieve financial independence earlier in life, you should aim to reduce the number of times you eat out by 50% or more. Here’s why:

When you eat out, you are paying more for food than you should. Besides paying for the base cost of the food, you are paying for the cook’s time in preparing it, the restaurant’s operating costs and profits, and the waiter’s tip (if you are eating out). In 2015, the average cost of eating out for lunch was $11, and this number has likely risen. The average cost to eat out for supper (or dinner if that’s what you call it) is around $20 or more per person.

The Bureau of Labor Statistics reports that in 2017, the average US household spent $3,008 dining out! If you were to continue those same habits for 5 years, you would have flushed away over $15,000 of your life savings. And we wonder why we struggle to grow the bank account. An easy fix to this problem is to start cooking in your own kitchen. Buying groceries every week to prepare food is much cheaper than spending extra money to eat out. Challenge yourself to start packing your lunch and cooking supper in your own kitchen. You will be surprised at how fast the savings add up.

2. Never Finance or Lease Vehicles

Ok, this is one that people don’t like to hear, but here is the reality. Vehicles are one of the fastest depreciating assets that you can own. It’s tempting to want to have the newest and best car out there. After all, you go to work everyday to provide so why shouldn’t you get the shiny nice new car?

Financing a car:

If you don’t have the money upfront to buy that new car you have been dreaming about, financing seems like a great solution. Dealerships want to convince you that you are getting the best deal. You’ve probably heard the catchy radio gimmicks like “Just $5 down to sign and drive!” Sounds like a great deal, right?

Wrong. Dealerships are not in the business of losing money. Unless you are getting an interest rate of 0%, you will be paying more money on that car in the long run than what it is actually worth. Consider that fact that most car loans last around 5 years. After 5 years, most vehicles depreciate by 50% or more. So now you are at the end of your 5 year loan, you have just paid cumulatively more than the initial value of you car, and your car is now only worth about half as much of the initial value. Now does that catchy radio slogan still sound like a good deal? Probably not.

Leasing a car:

Many people think leasing a car is a great deal because you get to drive a nice car for “low” monthly payments. But here’s the thing about leasing: you pay a sum of money every month and at the end you have no equity in the vehicle. So at the end of your lease, you have no asset that you can sell to make money. You are simply out all the money you spent. Let’s say you have a 3 year lease and make monthly payments of $300. After your lease is up, you will have spent $10,800 and have no asset to your name to show for it. I don’t know about you but I would have rather spent that money to outright buy a cheaper used car or invested it.

Granted, there may be some situations where it makes sense for some people to finance or lease, but these are few and far between. If you want to achieve financial independence at an earlier age, consider buying used vehicles until you can pay for a new vehicle in cash.

3. Consider Downsizing

What?? Why would I want to give up my nice big house that I have worked so hard for?

Because, you likely don’t need it. High mortgage payments are a leading cause of so many middle-class families living paycheck to paycheck. Consider that today, the average house size is over 2,600 sq. ft (U.S Census Bureau). Compare that to 1950 where the average size was 1000 sq. ft – and families were bigger then too! (Dave Ramsey). It seems like the more money we make, the larger we need to live. And this mentality is forcing us into the endless cycle of working longer just to pay for our McMansions.

So if you have an extra bedroom in your house that is used “in case guests come to stay” or any other space in your house that is rarely used, consider downsizing. Maybe you don’t think your house is that big, but in reality it is probably more space than you need. Keep in mind that many families throughout the world live in much smaller homes, including huts. To them, you are living like a king.

Another benefit of downsizing: less rooms to fill with junk! Also, downsizing could potentially slash your mortgage payments by hundreds of dollars a month. While saving money, you would also be able to own your home more quickly.

So, how much quicker could you achieve financial independence with lower food bills and freed up cash from having no car payment and a smaller mortgage payment?