This is a continuation of our series on Steps to Early Retirement. Please also see Part I – Setting a Budget and Part II – Determine Your Retired Living Expenses.

Crafting an early retirement plan involves the harmonic interweaving of multiple components. During pre-retirement, we have a long period of asset buildup, which basically involves living frugally and socking as much cash into investments as we can while still drawing a salary. We examined this phase in Part I.

Once that salary ends, a new phase begins. My projected life in early retirement involves an elaborate dance between satisfying necessary expenses while still living a frugal lifestyle and building a few different streams of extra income. In an ideal situation we can continue to earn more than we spend each month, thus continuing to add to our investment war-chest, thus increasing our dividend income, thus reducing any anxiety we might feel at first about major expenses, such as a roof replacement on the house. Continue reading →

In a previous article we looked at creating a budget for your pre-retirement life, as it’s the first crucial step in going down the early-retirement path. At this point we’re going to skip ahead a few years. I say a few optimistically, because it sounds emphatically better than saying, Let’s skip ahead 26 years to when you may finally be able to retire early at age 59, you peon.

OK, so let’s play a little game. Go ahead and imagine that you just retired at the ripe old age of 35, 40, 45, or whenever it is that you’re finally able to stop working for The Man. Congratulations! Feels great, doesn’t it? For the sake of this game, let’s also imagine that the mortgage is paid off as well, as I consider the lack of monthly mortgage / rent payments an integral component of our early retirement plan. Continue reading →

Since I’m now getting serious about retiring early, the first step is to formulate a master plan on how to get there. Everything I’ve learned so far tells me that there is a simple formula on how to achieve early retirement: Spend less money now + earn more income however you can + invest the difference = NO MORE BOSS. Over time, your savings will compound into a big rolling snowball that will eventually become monstrous and flatten your future expenses.

Sounds simple, right? Yes, it’s such a simple formula, but the discipline to rigidly follow it is ridiculously difficult. Oh well, a journey of a thousand miles begins with a single step. Continue reading →