How We Achieve Early Retirement
Obviously the purpose of this blog is to record and share how we go through our retirement path. We are achieving this through a very basic concept that a kid could understand - having income greater than spending. We all know this simple math, but implementation is the main thing.
It's easy to mention ways like earn more money, save more, better budget... etc. These are things everyone knows. But we grouped these into categories, and they become our main action pillars.
Limiting the spending
This is the spending part in "income greater than spending". Limiting doesn't mean giving up the lifestyle that you used to have. This is rather a reminder for yourself that for each dollar you spend it is spent wisely. Try looking around yourself, it won't be hard to spot something you bought and you wouldn't spend the money again on them.
There are some recurring spending that you could pay attention to as well. One example could be those monthly subscriptions on music app or like netflix. Joining a family plan might at the end lower a bit your recurring costs. And sometimes you might want to just suspend for a few months, it's easy to stop the subscription and resume in some time later.
Tracking your expense is a way to help identifying the spending you can limit. I have been using YNAB for 7-8 years to help me limiting my spending. You could get a month of free YNAB with this link. Why not give it a try for yourself? There will be more sharings around YNAB in later posts.
Knowing your annual spending
While limiting is one key, you need to have a full picture at where you stand on your spending. Somehow yearly spending is easy to be forgotten. These can be your tax expenses, insurance funding, medical checks expense... etc. Therefore keeping spending records for more than few years is a good practise not to loose track of any money spent! (I didn't notice I have been keeping this valuable data for ourselves)
Always bear in mind about the yearly estimated spending, that would help you notice earlier if you are off the track along the way
Meet your annual spending by passive incomes
This is quite self-explanatory and corresponses to the income in the "income greater than spending" concept. If you could manage to generate a stable passive income that could at least cover your spending, I don't see why you can't get retired. This could be a very very big topic, but here we just want to share one thing about it. The best is to plan passive income ahead, this is because passive income is a key determinator if you can quit your full-time job! And the snowball effect could be huge when you can drive more passive income!
Stay tuned on our further posts ;)