How I Retired At 41 - Part 1
To start off, let’s look at the definition of the word Retirement.
Wikipedia says “Retirement is the withdrawal from one’s position or occupation or from one’s active working life.[1]”
I have a slightly different definition.
For me, retirement means I have gained enough financial independence to make paid work optional.
I have the freedom to choose how to spend my time regardless of where or how I earn an income.
In my case, getting to the sweet spot of early retirement required a solid intention, good decisions and a bit of help from the Universe.
I’ve always been a reader and in the last few years have switched from literature to non-fiction, learning everything I could about everything I found interesting.
The idea of working because I WANTED to vs working because I HAD TO was fascinating to me.
I devoured The 4 Hour Work Week by Tim Ferriss years ago when it first came out.
I steadily worked many of his hacks into my corporate role to start building the life I wanted.
I’d fight for the opportunity to work from home, I’d ask for raises and new opportunities and I spent focused energy on what was important to my job more than what was required to simply fill an 8 hour shift.
I also lived very simply.
When I was married, I worked our budget in such a way that my (now ex) husband and I could live comfortably on only one of our incomes.
When we started out, I worked 2-3 part time jobs while he went to school, knowing that we were each doing our part to secure our future.
As our incomes grew, our spending really didn’t.
We were mortgage free when I was 35 years old – despite my taking 2 years of maternity leave.
We had negotiated a mortgage with flexible pre-payment terms, adding every bonus, tax refund, and wage increase to the principle to avoid paying any more interest to the bank than we had to.
Watching that debt decrease month after month was so satisfying.
The joy was short lived, however. Only 4 months after paying off our home, we ‘upgraded’ to an acreage with a beautiful 4 level split house and a big shop.
But we were able to leverage all of the equity in our previous house, so we weren’t starting from scratch, although we did have a mortgage again.
When we divorced a couple of years later, I panicked a bit at the thought of supporting myself and my kids on my salary alone.
But, an avid researcher, I reached out to a Money Coach, (a fee for service advisor -not an investment broker) to help me figure out my new reality.
I filled out an extensive questionnaire about my situation that included everything to do with finances from salary, benefits, insurance, wills, education and spending habits to investment knowledge.
In my first conversation with Barbara, she asked what were my fears about money.
That was easy - I assumed that as a newly single mother, I’d end up in some high rise welfare housing and my kids would always be dirty and covered in lice.
I was picturing Annie, and I was Miss Hannigan, with no Daddy Warbucks in sight.
Barbara studied my whole big picture and declared that would never be me.
And then we set on a path to make sure of it.
Over the next months, I took stock of everything I had, everything I needed and wanted and everything I was spending money on.
We set up a Spending Plan instead of a budget. This plan allowed every dollar that came in to have a purpose.
Even if that purpose was a random account I called ‘Extra’. I tracked every cent that I spent and every month I looked closely at where my money was going.
I stopped trying to fill a void with shopping or take out food – neither of which was contributing to any of my life goals anyway.
I read a book called ‘Your Money or Your Life’ by Vicki Robin which changed my entire perspective on finance, work and life.
In the book, there are formulas and ways to calculate how much life energy you spend on things that don’t necessarily matter to you.
For example, if you made $50/hour at a corporate job, you’d factor in all of the ways you spend your time and energy in order to have that job.
- Things like ‘costuming’ – the work appropriate suit & tie or stockings and heels.
- The time it takes to do your hair and makeup in the morning to make yourself presentable for your job.
- The time it takes to commute to work (including a stop for the fancy latte so you don’t snap at the first person you come across at the office).
- The vehicle you drive that shows your status, the insurance, fuel and parking costs to arrive at your workplace.
After work, you’re too fried to cook a healthy dinner so you grab takeout on the way home.
Then you need to sit and watch tv for a couple of hours to unwind from your day.
And don’t forget the 2 week tropical vacation you need to escape from your life.
When all of these items are added together, you may find that your $50/hour job actually only makes you $10/hour.
After figuring all of this out for my own situation, I realized that my cleaning lady was making more money than I was AND had a much better quality of life!
I began following people online who were part of the FIRE movement (Financial Independence, Retire Early).
Real humans had figured out what they needed to live on (their version of ‘enough’) and built lives around spending their energy on what they loved.
Some examples were extreme.
People living in squalor, eating nothing but Ramen noodles for years so they could save and build their nest egg for what was next.
I wasn’t willing to give up a decent lifestyle for myself and my kids, but did find ways to live on less and educated myself on what to do with the savings.
I also spent a lot of time sorting out how I wanted my future to look and feel.
Knowledge is power, but action is when change happens.
To be continued in Part 2…
Create a LIFE, not just a living...
thrive@wendyverwey.com
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