How to spend no more than 30% of income: tips millionaire, retired at age 35

In 2016, after accumulating nearly $1 million savings, Steve Adcock quit my job in software development and retired at 35. A few months later his wife Courtney joined him. This writes CNBC.

Как тратить не больше 30% дохода: советы миллионера, вышедшего на пенсию в 35 лет

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Not everyone will be able to retire in 30 years, but achieving financial independence many of the forces. It may not be easy, but you do not need to be a genius to do it.

No one wants to be bankrupt, so even if the goal is not to retire early, we should all live by these six core principles for creating wealth.

1. Make financial freedom your goal number 1

The first rule is the most important, and it has little to do with money. We are talking about sufficient desire to achieve the goal to make her your top priority.

“I had a great salary and I am well coped with his work. But I was afraid to go to work every day. I didn’t like to have a boss or sit on the related performance. Meetings, utility conflicts and a long trip to work was exhausting. So, I decided to make an early retirement as their main goal,” writes Adcock.

“I focused on making major changes in my financial habits. Instead of allowing my money to remain idle, I put in more. I also started saving 70% of their income. It was difficult at first, but became easier when I kept reminding myself that all I spent was things that I either haven’t used or needed them,” adds Adcock. — None of the changes made I was not a victim, because I knew all of them to achieve my goal. This is how to get in shape: you lose or gain weight only in the case if you change your diet and habits. And you have to want it enough to keep doing it.”

2. Actively increase your income

“Despite the fact that I was earning six figures, I always thought about how I can use your skills to actively increase their income,” writes Adcock.

He launched a financial website and was writing on it. In the end, he started to make the site an average $1,000 a month. Together with his wife they also launched a YouTube channel, which documented her journey, which brought another $400-$500 per month. And leaving some free time, he was earning a few hundred dollars on the side.

“But I still worked a lot on my daily work, because it was my main source of income. I wanted to show my boss why I deserve a raise for 10% or 15% (which I asked for and received twice). Midway in my career I plucked up the courage to ask about the promotion. Four months later I was promoted,” writes Adcock.

Courtney also earned a lot. As they both saved 70% of total income, which ranged from $200 000 to $230 000 per year, they are rapidly approaching early retirement.

3. Invest in valuable assets

Saving money, increasing interest rates and fuss will not help you to retire. Adcock together with his wife created a large part of the budget, investing in valuable assets such as stock market, real estate, businesses, and relics or historic sites.

The idea of this is simple. You buy an asset at a certain price. Over time the asset grows (or increases) in value. And boom, now you have something that is worth more than you paid.

If you invest $1000 and in a year you get 10% (or $100), then your new base is the starting point in the next year will be $1100. Another 10% of profits are $110. Add to that a couple of zeros, and the money will be enough to retire.

“In subsequent years through investment in valuable assets, we increased our savings to more than $1 million When it comes to investments, it is always better late than never. If you haven’t started, there are many resources on the Internet, or you can talk to a financial Advisor,” writes Adcock.

4. Automate, automate, automate

I always like the approach of non-intervention whenever possible, especially when it comes to money.

Many employers offer pension plans, and most companies will automatically make contributions directly from your paycheck to your investment account. After you configure it, you no longer have to worry about it.

Adcock and his wife used it fully when I was working:

“Automation will make your life a lot easier because you don’t have to rely on discipline when you pay your bills, avoid late fees, interest or credit downgrade,” writes Adcock.

5. Know where your money is going

One of the most effective ways to eliminate debt is to know exactly where your money is. Every penny counts. This is the basic principle, but many people lack the discipline to sit down once a month and review your expenses.

A few simple steps can make a huge difference in your finances:

Look at your invoices instead of having to lay them aside. Make sure you understand each position in your account.

“Fun” expenses should be after paying bills and replenishing retirement accounts.

Don’t ignore small expenses. They have a lot to tell you about what spending habits are working against you. For example, morning coffee, Lunches and much more — all of this is s decent amount.

Monthly subscriptions are notoriously forgotten. Make sure you know how much they cost and whether you use them or not.

6. Detach yourself from the things that you don’t need

“I had a Corvette Convertible and Cadillac CTS. I also rode a sports bike Yamaha R1 around the city, paying $150 a month for insurance. But I sold all those things once did early retirement as its main objective”

“We are with Courtney now live very modestly, and we couldn’t be happier. We have reduced the cost of cable TV and use the subscription streaming services for half the price. We spend only $50 a month on food in restaurants. We buy new clothes at least two times a year. We buy phones, only if the old completely broken, writes Adcock. — No need to give up everything, you need to reevaluate your priorities. I believe that you need to freely spend money on things that bring you lasting joy, and to cut costs on things you don’t need. The key is to recognize what makes you happy and what doesn’t”.