Before I started blogging, I can honestly say that early retirement never once crossed my mind. I thought that the normal age to retire was somewhere around 65 and that would be around the same time that I would retire.
I didn’t think people retired early, and if they did, I thought they were just lucky (which is a little funny if you read my post from the other day – Following Your Passion Is Not Just Luck).
Then, I started blogging and found a few early retirement blogs. Some of these include blogs like Retire by 40, Early Retirement Extreme and Mr. Money Mustache, which all show different people who worked hard to retire early.
I, of course, got hooked on all of these blogs and I knew that chugging along in a job that I didn’t like just wasn’t for me.
So, I made plans to leave my job so that I could live the life that I want. I knew that if I stayed in my day job that reaching early retirement would not be very easy, and that working on my own business would mean that I could enjoy my life while also working towards early retirement.
In October of 2013, I had my final day at my day job and switched to full-time self-employment.
Even though I left my traditional day job and I now work for myself, I don’t consider this early retirement. Many people have asked me what it’s like to be retired though, which I almost always have to laugh at because I am definitely not retired.
I actually enjoy working and staying busy. However, I will say that when I am 80 years old I hopefully won’t be working 40 hours per week. BUT, I would like to option to do what I want, and when I want.
If I find a new passion later in my life, I would like the option to do it if I can, without being controlled by how much money is in the bank.
The key in my case is that early retirement to me means financial independence. Yes, yes, I know, some of you are probably saying to yourself “they’re not the same thing though!” I don’t care, everyone can spend their retirement however they want, and I want to spend it still being at least somewhat productive.
If you look at how many “early retired” people live, you will see that most (if not all) are still doing something. They most likely don’t have a full-time day job chugging along for someone else, but they are doing something.
And that’s how I see myself.
Early retirement to me equals financial independence. And to me that means that I have enough money in the bank to live off until the day that I pass away, all while living my same comfortable life (i.e., I will not be eating beans and rice for every single meal, day after day).
It means that if I want to do something, I can go do it.
Hey everyone! Today, I have a post written by a fellow blogger, Lindsay from TeacHer Finance. Her blog was one of the very first blogs that I read. Enjoy!
Most of us know from our days in school that when we’re learning about a new topic or mastering a new skill there’s vocabulary we need to tackle in order to fully understand the subject matter.
While this is often challenging enough, it gets even more complicated when related terms sound similar but are actually different concepts. In teacher talk, these are known as “confusing pairs.” And in the world of personal finance, there’s no better example of a confusing pair than ‘credit report’ and ‘credit score.’
Differentiating between your credit report and your credit score may seem trivial – after all, they’re so closely intertwined that it may seem like splitting hairs to spend the time becoming familiar with the ins and outs of each.
However, having a clear picture of what both of these important entities mean to your financial life is vital, and it starts with understanding the fine difference between the two:
Ok, now that this confusing pair isn’t confusing anymore, it’s important to discuss why you should be paying attention to both your credit score and your credit report.
For starters, the items on your credit report determine your credit score. If your credit report shows on-time payments of bills and low levels of debt, your credit score will be high. This means that creditors are likely to extend you money for a home or a car at a competitive interest rate.
Obviously, it also means that you should be regularly reviewing your credit report for accuracy and correcting errors that you catch. Otherwise, you could be unfairly penalized for money mistakes you didn’t make.
Your credit score is incredibly important because it impacts your ability to do everything from get a loan to rent an apartment to get a job because your credit score is checked all the time, and not just by lenders.
If your credit score is low, you should make efforts to improve it. This starts, of course, with reviewing your credit report and figuring out what’s dragging your credit score down. As soon as your credit report starts showing improved financial habits, your credit score will rise and your financial life will get much easier.
The takeaway: even though they seem like the same thing, your credit score and your credit report are different beasts that both need to be looked after. Monitoring your credit is an important step towards a healthier financial future, so be sure to start keeping tabs on them right away!
Lindsay writes for Quizzle.com, the only place on the web to get your free credit report and score
Do you know what your credit score is? How often do you check your report?
Louis Mack is a seasoned retirement planner and self-proclaimed hippie. When he’s not giving advice on how to prepare for retirement, he enjoys spending his leisure time outdoors camping.
Saving for retirement is something that many people struggle with. This is because people view retirement as something that is far off in the distance and something they can “deal with later”. However, nothing could be further from the truth as the time to start considering retirement is the day you start working. By following some of these guidelines you can better prepare yourself for retirement and have the money you need when you actually retire.
The first thing to do is create a plan for your retirement. The first step to doing this is to determine your retirement age.
There are a number of factors that will affect your retirement age and it is subject to change as economic factors you have no control over can impact when you retire, but it is possible to get rough estimate by using a retirement calculator which will take into account how much you are saving as well as other significant factors.
This will give an idea of where you need to get to and from there it is all about finding ways to reach that goal.
This seems like common sense, but the importance of when you start saving cannot be understated. The earlier you start saving, the easier it will be to reach your retirement goals.
The reason starting early is so important is because it gives your money more time to grow. This is why it is important to contribute as much as you can early on, as this will pay off handsomely in the long run.
Another thing you can do to start saving properly for retirement is to utilize the retirement plans available to you. Typically employers offer retirement savings plans like an Individual Retirement Account (IRA) or 401(k) plan.
These plans can be very helpful for saving as they can be set up to automatically deduct from your paycheck which means you won’t even see the money you’re saving (making it difficult to spend).
The savings can be further increased with programs that involve “employer match” where your employer will match the amount of money you invest into your retirement savings. If this opportunity is available to you then you must take advantage of it as not doing so is simply throwing away free money.
Diversification is crucial to any successful investment portfolio. By diversifying you can protect your overall investment against the risk of one particular investment category tanking.
For traditional IRAs, it is believed that a mix of higher-risk stocks combined with lower-risk bonds creates a well-diversified portfolio. Although it may depend on who you talk to, a general rule of thumb is to invest in a percentage of bonds that is equal to your current age (i.e. 30 years old = 30% bonds).
If you want to go a less traditional route you can invest in a self-directed IRA. These alternative types of IRAs offer many more investment options that range from real estate to precious metals. No matter what route you take, it is important to diversify and it is always a good idea to speak with a financial advisor before making any investment decisions.
Investing in your retirement can be difficult as there are certainly things you would rather spend your money on now. However, the only way to achieve your retirement goals is to save as much as you can and start as early as possible. If you remain diligent and follow some of the principles listed here, you will be much more successful at budgeting for your retirement and saving the money you need.