Monday, September 19, 2011

Early actually possible!

I'm sitting here waiting for the stock exchange to open. And I've been doing this for a couple of weeks now. I've got a shopping list of stocks, and prices that I'm willing to buy them at.

Why all the investing mania, you might ask? Well, when the stock market took it's latest fall back in August, I watched the news intently. I've been thinking about doing more than just dumping money into retirement accounts, where it mostly sits in index funds, for quite some time. I haven't, however been all that inspired to take the plunge and learn enough about it.

That all changed, though, when I ran across this blog. Basically, it's written by a guy named Jacob who saved 70-90% of his income for five years, became financially independent at 30, and quit his job for real at 33 when it was no longer fun for him. Now, he's not some millionaire, and, among other things, lives in an RV in order to keep his expenses down enough to live on his investment income, plus he doesn't have kids (and is married to a spouse who is still working and covers her own expenses), so I don't see his story as completely possible for us.

However, it really has got me thinking. The most helpful thing I got from his story is the idea that when planning for retirement, you can't spend all your time looking at your money and wondering how big it needs to be (does anyone else hate those calculators that tell you you are going to need a million bucks by the time you are 65?). Instead, you need to calculate how much it costs to live today, and then figure out how much you need in order to keep that standard of living. When I looked at it that way, I was surprised to realize we could easily save more than half Oliver's pay if we put our minds to it. And it wouldn't even hurt.

So, since I am well aware that most frivolous spending in our house comes from me, I'm refocusing, and sending all the extra money to a new, taxable account (since most of our retirement accounts are fully funded, and I want a better diversity of accounts in case we manage to meet our goal of retirement in our early 40's). I've got an investment strategy, after spending more than a week reading everything I could get my hands on about investing (and still reading, just not as avidly). I don't know how this will play out, but for us, this is just another step on a path we took long ago when we decided to only have one car because it would accelerate our debt payments. Then, we just kept it up when it was all paid off because we'd gotten used to it and now we were saving all that debt money.

There's now way we'll be able to do what Jacob did, due to having kids, being a one-income household, and past mistakes, but we've come up with a plan that is comfortable for us. The biggest surprise is for me is that it's actually possible to make early retirement happen, as evidenced not only by this blog, but all the other people who comment on it and share their stories. Crazy stuff. You should read it.

And now back to the stock exchange, which has finally started trading.

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