Retire early recipe: Earn more, spend less

As I make progress towards my goal of retiring before I turn 40, the techniques and efforts required to do so are becoming clearer to me.

My goal to retire early started about a year ago when I realized that I wasn’t passionate about my job anymore. It reached a point where I was afraid I could quit if I got too bored. Hint: it’s not something I could afford because I have a family to take care of, and I’m the breadwinner. It dawned on me that my responsibility to my family had me “locked down” into coming to the office every single day, no matter how bad I hate a given job.

Switching to another company wasn’t the problem: the problem was this feeling that I was trapped in my own life, condemned to work for a very long time in order to provide for my wife and kids. After a while, I couldn’t live with that burden and decided I had to look into ways to accumulate enough money to become financially independent.

If you’re reaching this blog, maybe you’re already in the same mindset, or maybe you’re just asking yourself the same questions I was asking myself about a year ago: how much do I need to retire early? Is it even possible without being a multimillionaire?

The thing is, there are two things you need to achieve in order to retire early: spend less, and make more. You can choose to do only one or the other, but trying to do both is increasing your chances of success.


In general, I have found that it is much more easier to start spending less, than to start making more. Stop eating lunch out at restaurants every day, change to a more appropriate phone plan (without changing your phone habits), and you’re already saving an additional 5% every year, just with a couple simple changes. Now, try and go see your boss to ask for a 5% increase of your paycheck overnight.

But I also found that spending additional time on my money making hobby was extremely fruitful. Although getting a 10% increase on my salary next year is very unlikely, I have seen a 90% increase in my online revenue, by thinking outside the box and putting a bit of elbow grease on my hobby. My hobby is far from generating the same income that my day job is, but it is increasing at an impressive rate, and is going to dramatically help with my early retirement plans, especially since most of the money from my hobby goes directly into savings.

Over the past twelve months, I have found that:

The key to early retirement is not to make more money, but to spend less of it, more wisely, in a way that does not negatively impacts your happiness. It turns out this is really easy to do, and can dramatically accelerate how soon you will be able to retire. Keep in mind the 4% rule. You need an egg nest of 25 times the amount you spend every year, not 25 timse how much you make. I’m stating the obvious here, but spending less means you need to accumulate much less in order to guarantee an early retirement.

Although Making more is not the key to retiring early (see “spend less” above), making more money is not as difficult as one might think. But you have to think out of the box. It is unlikely that you’ll get a huge promotion at work, but you can start your own side business, or get paid for stuff you would typically do for free, such as a hobby. Therefore, making more money is a great way to accelerate your early retirement schedule, as long as you also follow the rule of spending less.

Overall, this year our family is on track to decrease our expenses by about 25%, and increase our revenue by about 20%. These are exceptional numbers that just showed me how much waste was going on in our lives (both on the expense side and the “making money” side), I don’t expect next year to be remotely near that type of life-changing values, but it’s great to feel I’m on the right track.

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