Top 6 Early Retirement Tips You Can Start Today

Early Retirement TipsUnless you are lucky enough to absolutely love your job and can’t even imagine not being able to go to it every day, you probably dream of taking an early retirement. But without advance planning and work, it will be hard to achieve that goal.

Here are the top 6 early retirement tips that you can start working on today to get you closer to your early retirement dream!

Get Rid of Your Bad Debt

Nothing can derail a great early retirement plan like bad debt, so eliminating this is the first tip you need to look at. All debt is not the same, and there is good debt that is healthy at certain levels.Credit Card Debt

But bad debt typically has high interest rates and can snowball very fast into payments that are difficult to manage. One common example of bad debt is credit card debt. I know how easy it is to use that credit card and have been in a position where I had to pull myself out of substantial debt from misusing it.

If you are having problems getting ahead or making your debt payments, the great news is that there is wonderful help out there. Many people find it hard to reach out for the help that is available. But getting you and your family back on stable financial footing is well worth it!

==>==> See my #1 recommendation to help you get debt free <==<==

Take Advantage of All Tax Free Savings Plans Possible

If you have access to a 401k plan at work, you’ll want to take full advantage of it. Most companies that offer one also contribute a matching amount up to a certain percentage or dollar amount. Not taking advantage of the matching funds is literally leaving free money on the table!401k

For example, say you make $50,000 a year and your employer matches your contributions up to 6% of your income. If you contribute the 6%, that will be $3,000 over the course of a year, and your employer will contribute another $3,000. If you choose not to use this program, you are giving up the free $3,000 every year that could go to your retirement as well as the interest and gains from those funds.

Another advantage is that your contributions are tax free, meaning that your take home pay won’t be reduced by the full amount of your contribution. If you are paid biweekly, contributing $3,000 would take out about $115.38 from your paycheck. But since taxes will not be taken out on that amount, your take home pay would only be reduced by about $98.08 assuming a 15% tax bracket.

If you don’t have a 401k available to you, my best advice is to pay off that bad debt first! Then open a tax free IRA for both you and your spouse, if you have one, and max those out. After that open a Roth IRA for both of you and put as much into those as you can.

Roth IRAs give you a different tax advantage from traditional IRAs. You use after tax dollars for your contributions, but all the interest and gains will not be taxed when you take them out. This is hugely beneficial to you during retirement when you don’t have to pay income taxes when using those funds.

How much will you need to retire?  Here’s a great calculator that you can use to determine what age you can retire based upon the factors you insert:

Build Your Early
Retirement Age Calculator

Minimize Your Expenses

The 2 steps above will be much more difficult without making an effort to minimize your expenses. If your goal is to retire early, you need to set the priorities that will make every dollar count toward achieving that goal.

Now I’m not talking about making the kind of sacrifices that means you have to give up every enjoyment in life. What I am talking about is prioritizing your expenses to ensure they are adding value to your life in relation to your goal of early retirement. Here’s some examples:

~ Car payments–I hear all the time, “You’re always going to have a car payment, so I may as well trade toLarge car payment a new one every few years!” No, it’s a choice to always have a large car payment, just like I once did.

A car is simply transportation to get you from one place to another, and your needs are how well it fits your family and how expensive it is to drive and maintain. People who successfully retire early don’t see value in a car that is more than they need.

Once I changed my way of thinking, it amazed me by how much money I could save every month. A $35,000 new car will cost you about $650 a month for 5 years. But look for that same car that’s in great shape with low miles that’s already 5 years old with a huge amount of depreciation in value already figured in, and you could buy it for around $20,000 at $450 a month for 4 years. That’s a savings of $17,400!

Not only will you save in buying costs, but with regular maintenance and good upkeep, your car can last well past the time it’s paid off. This gives you time to put that car payment in the bank and build up a great savings for when you need to replace it!

~ House payment–How much house do you need? How willing are you to refurbish a home? How much are you willing to sacrifice to pay it off by your early retirement date? These are just a few of the questions you need to ask yourself.Large house payment

The decisions you make about your housing costs need to be made in relation to achieving your early retirement goal.

You may love that completely remodeled 3,000 sq. ft. house with the gourmet kitchen and 5 bedrooms. But if the 2,000 sq. ft. house that needs some remodeling has low property taxes, and will enable you to retire early, is on the market, are you willing to sacrifice and buy that instead? This is the mindset you need to have when evaluating your housing costs.

~ Monthly bills–Any way that you can reduce your monthly payments for things like utilities, cell phone bill, insurance, etc., will free up cash for your retirement goal. You can research different cell phone plans and insurance companies and shop around for the best rates. Even being mindful of small things like adjusting your thermostat and turning off lights can add up over time.

About 8 months ago, we switched to an hourly pricing program with our electricity provider because it was supposed to be more economical. Since then, we’ve saved an average of 20% on our electrical bill each month!

Develop An Additional Stream of Income

Up until now I’ve talked about how to reach your goals with the money you have coming in now. But no matter how much you tighten your belt, there are times when you can only stretch your dollars so far.Develop a side hustle

So an option that you may want to consider is developing another source of income. That could be a part-time job, or better yet, a side hustle that lets you be in control of how much money you can make and how much time you can devote to it.

If you’ve never heard of a side hustle, I go into more details about it at  What Is A Side Hustle and How Can It Work For You?

I started blogging and affiliate marketing as my side hustle awhile back with a goal to quit my full time job and be home with my family more. I’ve been able to retire from my part-time job, and we are well on track for my husband to retire many years before his full retirement date.

==>==> See how I learned to make money online from home <==<==

 

Pay Yourself First

Pay yourself firstPay yourself first can be a misunderstood concept. When I first talked about it with my 16 year old daughter, she got the impression that you spend your money on what you want first, then pay your bills and savings with what’s left over. She got a rude awakening!

Pay yourself first means that you set your savings up as a monthly bill, and pay yourself that amount into your savings account each and every pay day first. Then you pay all of your household bills and monthly payments that are due, and THEN you spent what’s left over on the things you want.

You need the mindset that your financial security, now and in the future, is a priority like any other financial obligation. Once you do that, you will be surprised how much easier it will be to start recognizing the things that don’t add real value to your life.

Create a Written Plan to Reach Your Goals

You can think about a goal a hundred times, but there’s something about actually putting it down on a piece of paper that makes it seem more important. A plan and a goal make you more accountable when it’s staring you in the eye–which is exactly why you need to write one!

Your plan can be set up any way that works for you, but you need to be specific with what you want toCreate a written plan achieve and the steps you will take to accomplish it. Here’s a couple of examples:

~ Instead of saying, “I want to start putting more into savings each month”, you say, “I will decrease my grocery bill by $50 each paycheck and add that money to our savings account.”

~ Instead of saying, “I will start contributing more to my 401k”, you say, “I will increase my 401k contributions by 1% each time I receive a raise in salary until I am maxed out.”

Each time you create a specific goal, you become more accountable and you can check your progress and see your achievements. Not only is it easier to stay on track, you will get the sense of pride and accomplishment every time you see your success!

You Can Start Your Plan Today!

Retirement can seem very far away. But if you take these 6 early retirement tips and apply them to create financial security for you and your family, anyone can achieve their goal!

Do you have an early retirement plan? Have you created your goals? Do you have a plan for eliminating your bad debt? Let us know your tips in the comments below!

I'm Janelle, a wife, a mother, and a grandmother of 5 angels (most of the time)! I started BuildYourEarlyRetirement.com as a way to show how anyone can become financially independent and retire early. As I build out this site, I hope you'll comment and share your experiences as well. Good luck in all your endeavors, and may your success start now!

16 Replies to “Top 6 Early Retirement Tips You Can Start Today”

  1. Although I am young, I must say that I already tired of the corporate world. I want to work for myself and be able to retire early, in like my 40’s. Lol…

    But I know that it will take hard work, patience and some time. AND A LOT OF SACRIFICE.

    Thank you for your amazing tips! I will add them to what I am already doing to save. I already make use of my TFSA, I am making low car payments already because I did get a second-hand car. I pay myself first and I am trying to also get rid of bad debt.

    What I also do, is always take cash to go and do the groceries, never my debit card or credit card. I find it is so easy to overspend with the cards. You don’t see your money being spent.

    But with a $100 bill for example (for every week), I know I cannot go over and thus it helps me get rid of stuff that I really don’t need in my cart. And if I end up having change left, I dump it in a piggy bank for more savings.

    1. It sounds like you already have a wonderful plan for keeping down your debt!  Good luck with your early retirement goals, I have no doubt you’re going to achieve them!

  2. Janelle,
    Love your post on 6 early retirement tips you can start today. My favorite is the make a plan part. I’m all about making a plan to accomplish something. Lots of people don’t create a plan to follow and I think it hinders them in achieving their goals.
    My employer matches up to 6% on the 401k so you can bet I max that thing out. My wife and I are actually currently in the process of looking at houses to downsize. We’ve still got one daughter at home but that will only be a few more years. Our house is fine but we don’t need all the space and could use the savings on money. The side hustle part is awesome as well! I’m a big believer in that and am surprised more people don’t do something on the side.
    Thanks for the great article!
    Mat A.

    1. I’m so glad you found my post helpful, and it sounds like you’re already on a great path to your early retirement!  Starting a side hustle can be a lot of fun and make money in the process.  So if there’s something you love to do or an interest that you have a passion about, there’s bound to be a way to use it to start yours!

  3. As far as I see, whether you will be able to retire early or not, is a psychological game. Are you capable of regulating your life more, and doing things a bit differently by canalizing your energies and financial resources towards a long-term goal?

    It is a very tough thing for a human. If you had a computer in your head instead of your brain, it would be easier to always remain rational and calculate, but you have an organic brain with emotions, impulses and desires.

    However, the techniques you’ve shared prove to be really effective. You can use them with success in this game against yourself.

    The calculator is great. Thank you.

    1. It can definitely be very difficult at times to have long term thinking about retirement when it seems like such a long time away.  Years ago, you didn’t have to think about your financial future in retirement as much if you had a great pension and people stayed at their jobs much longer than today.  It’s definitely a different world today, and everyone needs to plan much earlier in life for their future.

      I’m glad the calculator was useful, and thanks for stopping by!

  4. Hey Janelle, I loved your post. First, I like how you covered all the requirements that’s necessary for saving up for retirement or so you can have a retirement fund of some kind. 

    Second, I liked your story about how you told your 16 year old about the difference between paying yourself and bills. Also, I want to go on record as saying that I’m going to save your post because it is a good roadmap to follow when I’m ready to start saving up for a retirement fund. Great job!

    1. Thank you so much!  I know how hard it is to struggle with everything in your life right now, and retirement can seem so far away.  Between making a plan to save and starting my online business, I have now retired and get to spend my days enjoying our country life and taking my grandson back and forth to school.

      I didn’t do a good job setting a good financial example for my girls when they were young.  So I had to take a good look at my finances and money habits and make a lot of changes!

      Good luck building your early retirement!

  5. What a great post! It’s well-structured, engaging and informative. I particularly appreciate the way you’ve clarified, “Pay yourself first” and “Create a written plan”. Where the written plan is concerned, your examples set off some lights in my head. I’ve always had written “plans” but not as specific as you’ve shown in your examples. You’ve given me a lot of food for thought, and I’ll be returning to your site often. Thanks!

    Norman

    1. Thank you for commenting, and I’m glad you found it helpful!  

      I started really making headway with my finances after realizing that a written plan helped me.  Saying things like, “I need to save more money” or “I’ve got to spend less” never worked.  But when I started really being specific with what I wanted to do, it was so much easier to actually do it!  

  6. Hi Janelle and what a great post- i am 60 now and I still have a few things on your list to sort out and I just had a look at the website Wealthy Affiliate via your link and feel this might be an excellent way to create passive income so when I stop working I will still have extra money coming in which would be so helpful as I am on my own so need all I can get if you understand this.

    I don’t want to be old and poor as thats no way to live so Im going to join for free and take a look and if it looks good Ill gp premium and get building – thank you for sharing this really important information

    1. You’re welcome, and I’m glad you found it helpful!  Wealthy Affiliate is definitely a fantastic platform to start your online business and create passive income for your retirement.

      I host 6 websites there now, and can say that their program is the best I’ve ever experienced in terms of training, website hosting, and their great community forum.  

      Good luck with your online business, and I’d love to hear back from you about how it’s going!

  7. I really like the information in this website and especially how it incorporates being an affiliate for WA good idea. Actually this is the only retirement plan I can actually say will work for me since the site is focused on the baby boomers most had good paying jobs, superannuation or stock bonds and are receiving pensions.  For the millennium babies, there retirement will look quite different.  May I suggest a post for the millennium babies since they are focusing on Cryptocurrencies and Investments. The Housing market is steady but hard for lower income earners to purchase their first home but can be achievable with seminars available to teach them how to purchase and yield in duplex properties. At a second glance at the website I then realised it was a WA affiliate website yes I would of signed up if I was looking to retire from my day job. It looks legit and not scam like its factual and really honest I think 55-60 age group would love this website but never know younger ones are becoming more concerned about their future and want early retirement from 9-5 job.

    1. Wealthy Affiliate is definitely not a scam and has helped thousands of people make real money online.  The difference between WA and most other programs out there is that they actually teach you how to make long-term, sustainable income and they are honest about the time and effort it takes to do it.

      Too many programs out there are doing nothing but filling the pockets of those who create them while making inexperienced people think that they can actually get rich quick. More often than not, they don’t make money, in fact most lose money–sometimes a great deal!

      Thank you for stopping by and taking the time to comment!

  8. What great advice.  I think planning is key.  I’m not thinking about retirement yet but maybe I should start.  Thanks for giving all these actionable tips that I can use to start thinking about the future.  That calculator thing is really interesting (but a little scary). Haha.  I’m trying to create a side hustle like you suggested.  Time is always a factor when doing these things.  What are the best ways to create passive income for the future?

    1. The earlier you start thinking about your retirement future, the better you’ll be prepared for it!

      I definitely think that some sort of online business will be the #1 way to create passive income going forward.  Not only can you start it before you retire to help you build your nest egg, but you can continue your business in retirement and work on it no matter what your plans are!

      Whether it’s affiliate marketing, selling products online, writing and selling eBooks or training courses, or simply blogging about something you’re passionate about, an online business has huge potential now and in the future.

      Thank you for stopping by and good luck!

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