Retire early and travel.

in #travel7 years ago (edited)

Most of the people who retired early have a lot of the same habits in common. I am not a financial planner but rather just a mom, wife and friend. I did retire over a decade early, and I would like to help you do the same. In fact, I know you can retire earlier than I did if you give retirement careful thought earlier in life. It is almost impossible to obtain an early retirement if you do not have a percentage of the money you make working for you. You can’t achieve early retirement if you are living from paycheck to paycheck each month. If you get your money working for you now, then you can earn money even while you sleep. The best way to do this is with compound interest.

Let's look at some habits of people who retired early.

  1. They Never Pay Interest
    The people who get rich are the ones who are earning interest not paying it. Some people think nothing of taking a loan to buy a new car or buying the latest electronic gadget on their credit card knowing they still have credit left. All of this adds up to paying interest. Not something you want to do if you ‘re going to get ahead in your early retirement.

Cars are expensive to own so make sure you need one before buy. I recommend saving your money and buying a good used car. New cars may be fun to drive, but they are not a good investment. A 2 to 4 year old vehicle is a much better choice and makes it easier to pay cash.

Never purchase TV’s, furniture or anything similar with credit. People who retired early do not spend their money on interest by carrying credit card debt month to month.

Mortgage and Education Interest is Hard to Avoid
Two things that can be difficult to buy without a loan and paying interest are housing and education. Consequently, it may be necessary to have a student loan for college. Education is something I feel you can go into debt for. If you do, make it your goal to pay it off as soon as possible. Work a part-time job on the weekends and use all of that money to help pay off the loan quickly.

Sometimes, getting a mortgage to buy a home is an ok investment and other times not. If I were buying a home today, I would look for an undervalued one in the area I would like to live in, maybe a fixer-upper. In addition, I would only buy it if I thought I would be staying in that home for five or more years. Remember when determining the total cost of a home to include closing costs to both buy and sell the home. Most of your house payments in the first five years will go towards interest so you may owe almost as much as you borrowed after five years.

Houses can appreciate, and your best chance of that is with time and by buying something that is below market value and not the most expensive house in the neighborhood. It is ok to buy if the cost of owning the home, including taxes, insurance, maintenance and closing costs is less per month than what rent would be. Just remember, the way the worldwide economies have been, there’s no guarantee of appreciation in 5 years or less of home ownership.

We Did Everything Right, and Things Still Went South
We bought our first house the year we got married. Then we moved six times in 25 years and always used the equity/appreciation from one home to buy another. We even made two extra house payments a year. Then while we owned our sixth house, we found ourselves having to sell our home during a down housing market. We lost all of that equity we had built up. At this point, the money we had spent on buying, maintaining, improving and selling homes was nothing more than rent. Remember there are no guarantees.

  1. They Max out Employer Matching 401K Investments
    A 401K is a great way to save for retirement. Many companies have a matching program where for every dollar you put in, the company will match it with .25, .50 or even a dollar up to a certain amount. Therefore, you should never pass up this free money. Always contribute to receive the maximum matching possible. Employer matching 401K programs are so powerful that this should be a significant consideration when looking for employment.
  2. They Save in Other Ways
    If your goal is to retire early, before 59 1/2 years old, you will need to have money saved that is accessible to you penalty free and without age restrictions. Which means having part of your after-tax savings in a standard brokerage account. Or invest in rental property. Rental property is excellent to own since it gives you a monthly income you can use for early retirement. Or you can just sell the property outright at retirement time. Others we’ve know have sold their small businesses and used that money to retire early on. The point is, you need to have money outside of age-restricted retirement investments that you can live on for an early retirement.
  3. They use Credit Cards to Earn Points
    The first thing I said was that you should never pay interest. Many people get into financial trouble with credit cards. I think credit cards are great. Their convenient in that you don’t need to carry around a lot of cash. Most credit cards offer some reward for using them. With some cards, you earn airline miles or points, and others pay you cash back. I say use credit cards to pay for everything that you possibly can and then pay the balance off each month. Credit card points are a great way to get free travel and buy gifts.
  4. They Have a Budget and Stick to it

If it is your goal to be like one of those people who retired early than you have to know how much money you have each month for savings and spending. Consistently overspending will wreck your ability to invest for retirement. Budgets are great for seeing where your money is going each month. You may want to make it a game by trying to come in under budget each month. And if you do come in under budget, take the money you saved that month and invest it. Because every little bit today will make a big difference in the future.

People Who Retired Early
Most people who retired early have certain habits in common. They avoid paying interest whenever possible. These people use credit cards extensively to earn points or cash back while paying the balance off each month. They understand the value of compound interest, and they know where they are spending their money. Work is rewarding and enjoyable, but there are many other things you can do with your time. Make sure you are giving yourself the option of retiring early if you want too. It’s easy, and anyone can do it at any age with a little discipline.

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ok. pero no es muy facil hacerlo, hay que saber el momento