How Frugality Can Lead to, and Sustain, an Extreme Early Retirement

Many of you know that I grew up on a family dairy farm in Pennsylvania. If you have seen the increasingly popular and ridiculous show Amish Mafia, then you have seen the backdrop to my childhood.

Life was a lot of work, even with five pairs of calloused hands keeping our farm afloat. Under the weight of two milkings per day, fences and equipment repair, the planting of crops, the harvesting of them later in the summer heat, and tracking down newborn calves in the back meadow, we all groaned, griped, and whined. Having a grandfather who loved to bark orders at us did not help the situation, and made us rather resentful.

As I grew older and dug myself out of the manure trenches, I started to understand why my grandfather loved to bark orders from on top of machinery or from his apartment upstairs to us working-folk; it was because he had already put in a lifetime of hard labor. Through his 50s onwards he had a limp. And that limp was from doing 40+ years of precisely the type of daily, back-breaking work my family was subjected to.

I didn’t want that for myself.

Working day in and day out from before the sun rises until after it descends and seeing such little money stay in my parents’ pockets made me reassess the seemingly linear relationship between work and money. When you work yourself to the bone and you see little monetary return five, ten, and fifteen years out, you really change your perspective. You start to respect money. Money to me was never about being a vehicle for getting what I wanted; it was about keeping as much of it as possible to have something to show for all of the work I was doing. I didn’t want to hand crank the survival cycle of hard work and low pay for the next 30+ years. Don’t get me wrong, I was never averse to work and some weeks could be the poster child for a workaholic. But I wanted something more.

For all of my childhood and most of my 20s I was curious about people who did not seem to have to work themselves to the bone for pay. Not envious, just extremely eager to observe, learn, and implement whatever they were doing. While I dreamed that one day I would be able to sustain myself without having to work to the bone for everythinga pipe dream if my grandfather ever heard of one—deep down I just didn’t know if it was possible. And then something wonderful happened. I figured out that life didn’t have to be so hard, and that earning decent money did not mean I had to physically exhaust myself. This coincided around the time when Paul and I paid off our non-mortgage consumer and student loan debts and our cash flow opened up. Our bottom line grew, and with it our financial independence and security. Suddenly everything seemed possible, including early retirement.

Check out my recent news segment on Fox 26 news about Early Retirement Extreme–>Houston weather, traffic, news | FOX 26 | MyFoxHouston

You Need to Redefine the American Dream

As I mentioned in my recent Fox 26 news segment, if we want to be able to dream about and potentially live in early retirement, then we need to redefine the American Dream. Whose American dream is it to be mortgaged or financed? In whose dream is someone thinking about a scenario where they can rent-to-own? I would venture to say that no one would associate these financial terms with their American Dreams. And yet, many of us fund our “American Dreams” with loans that ensure we stay deeply entrained in the survival cycle. Under the current mainstream system of “buy now, pay later”, we are literally trading years of our lives in sometimes back-breaking work for trinkets and “luxuries” today. Trust me, these trinkets and luxuries on loan today will not shine so brilliantly when you are stuck working extra years in a cubicle and/or high-stress job.

So what does the new American Dream look like? It is paid for as you go, it is simple, and at the core are the true gems: financial independence, security and freedom.

You Need to Redefine “Retirement”

Most people within the extreme early retirement world are targeting not only an early age for retirement, but also a different kind of retirement than the traditional one. Retirement, in the traditional sense of the word, is when you resign from your last 9-5 job and take up, well, living. If you have saved enough money and can withdraw a decent income (from a mixture of savings, social security income, pensions, 401(K)/IRAs, etc.), you can do practically anything that you want to. That is, once you turn the typical age of 62 years or older.

So what could an extreme early retirement look like? The extreme part about it is that you will be much younger when it happens. This is partially achieved through a large sum of savings that you have set aside, and partially achieved by redefining the traditional definition of retirement. Retirement could perhaps be a second act of employment where instead of working a 9-5 job you only marginally enjoy to pay the bills, you are working an enjoyable part-time job, hobby job, or passion job to help buffer your retirement savings. Instead of living in a relatively expensive area and or country, you research and move to a cheaper area or a cheaper country that offers free healthcare. Perhaps you change your entire spending habits around like Jacob who saved more than 75% of his income for 5 years and has lived on just $7,000 a year for over a decade now.

Living the Principles of ERE will Redefine Your World

Not working in a 9-5 job for 40+ years of your life is truly a revolutionary and sometimes counter-culture idea. If you choose to go down this path, prepare to have your life change dramatically (they don’t call it “extreme” for nothing). Even if you don’t want to follow the path through to its eventual end, living by some of these principles will give you more financial security, more financial freedom, and less money headaches. It will also teach you that paychecks aren’t a life-sustaining force, growing and declining just enough so that we can feed ourselves.

On the “extreme” early retirement scale, my husband and I are probably considered moderate to extravagant. We still have vehicles, we have a home, we did more than go to the county courthouse when we got married, and we don’t even have a target age of when we would like to “retire”. That’s right; to us it’s more about living the principles of ERE and benefitting from it long term rather than actually retiring at a very young age. But compared to many people’s lives, we are considered extreme.

In the next article I will discuss the steps you need to take in case you want to start down the extreme early retirement path, as well as share with you more of our lifestyle to show you how it parallels with this concept.

What is your target retirement age? Are you on the path to extreme early retirement?

14 comments… add one

  • I retired from the corporate world at 29 and could stop working completely now (32) to live off investments and real estate, but I like to keep busy and some of my occupations turn out to be profitable, like blogging.
    Anyway, my dream has always been pretty simple, a little house, grow my food, like an Amish with electricity and a laptop basically. So it doesn’t require a lot of money to achieve, hence the super early retirement age. If you need to renew your closet every year with brand clothes it will take much longer. Then in between there are lots of people who still pay for things they don’t need and wonder why they can’t afford to work less or retire early.
    Pauline recently posted..Defining my dream, little guest house in Guatemala

  • I’m not sure if I ever went to retire early, just because I don’t know what I would do with all of that time. I would like to be financially independent though and pursue what I love – whether that be full-time or part-time. Hopefully that time is within the next year!
    Michelle recently posted..Student Loan Update and $805 in Extra Income

  • My goal was never to retire early, but rather achieve financial independence. I did that at an early (late 30s) age and proceeded to do all the things I enjoyed. I worked because I was interested or enjoyed what I was doing. Having suffiecient money or investments to be independent change syour outlook on life.
    krantcents recently posted..Is There Right Time to Buy Real Estate?

    • FruGal

      That is wonderful you reached financial independence at an early age–it gives you such a long time to enjoy it! We are the same; we don’t have a retirement age target (and quite frankly, I am enjoy what I am doing so I don’t know that I would ever want to retire fully). But financial independence is definitely what we are seeking.

  • Krantcents makes an interesting point about financial independence versus early retirement. Often, smaller goals help us achieve larger ones without the psychological obstacles.

  • Yeah, it would great to retire early. But come to think about it, there’s too much time. Too much time that you’ll get bored eventually, or too much time to do the things you want to do. We all have our own goals. Just like Krantcents, being financially independent is the key.
    KC @ genxfinance recently posted..Sell Your Old Cell Phone and Electronics for Cash

    • FruGal

      I think for people that retire early (or when the rest of us retire at the “normal” age), you need to find things that you enjoy doing to maintain purpose or happiness. Otherwise, what is the point? Also, as mentioned above, my husband and I are more looking for financial independence and less looking for an early retirement. But going down this route can lead you to both paths.

  • How did I miss that TV spot? Very cool! Maybe you can embed the video in the sidebar of your homepage or something? Good advertising!
    Financial Samurai recently posted..Why I Dislike Investing In The Stock Market Even In Good Times

  • jim

    K- guys & gals,
    Old guy here. You’re totally losing me. Seriously, how do you become financially independent at 1/2 my age? Have you guys raised kids? put them thru college debt-free? paid off a mortgage? paid your own way thru undergrad and grad school? supported aging/ailing parents? Really – I’m asking ’cause I haven’t a frickin clue where you’re coming from. Thx for any and all explanations. You’ve piqued my curiousity.

    • Hello Jim, and welcome!

      Let me give you some more details. To begin with, we are not financially independent in the sense that we could retire right now or anything like that. I was able to quit my day job three months ago in order to pursue my writing and blogging business as part of having our financial house in order (due to us living frugally, having paid off each of our debts except for our mortgage several years ago, and having substantial savings; plus my husband’s paycheck can pay for our bills/retirement savings each month).

      We both mostly put ourselves through college; my tuition was $32,000 a year, and I came out of college with $36,000 in debt after scholarships, grants, federal work-study, etc. That debt was paid off in 2010, five years after I graduated, because I worked hard at paying much more than the minimum. My husband went to two years of college before going into the Navy, and he paid off his college loans while in the Navy.

      My parents are only in their early 50s, so not ailing yet. Paul’s parents are also healthy and well. We still have a mortgage, and refinanced that with $400 in closing costs (hurrah!) to 15 years at 3.5% interest, and are currently debating whether or not to pay off the mortgage early, or to invest more of our money. We have two vehicles, both of which are paid off (I only purchase beater cars in cash and ride them into the ground; my husband bought a car in 2007 and we plan on him riding that into the ground as well).

      So we are living many of the principles of the extreme early retirement lifestyle, and one day may be in the position to retire early (though I enjoy my writing/blogging, so I probably would never fully retire).

      Does that help? Any other questions you have for us?
      Amanda L Grossman recently posted..House Rich and Cash Poor: How to Save Money on Your Home After the Closing

      • jim

        Yes, that helps. It’s very interesting to me. Good for you all. Best of luck. But I’m still curious. Are you planning on having kids? If so, how do plan to pay for their raising/education? I can see how this is totally possible if you’re only supporting yourselves, but once you bring kids into the picture (and assuming you’re planning on paying for their education – and I’m assuming you would want to do that ’cause you wouldn’t want them laden with student debt) – that kind of changes the picture, doesn’t it? Not to mention all the unexpected bills that come hand in glove with kids, i.e. illnesses, disabilities???? Just curious. Thanks.

        • FruGal

          Hello Jim!

          We have not decided if we would like kids or not. If we do, we would raise them to have (hopefully) the same frugal values as us. Of course, I wouldn’t want to overwhelm them with it, as that may make them run from it as adults and spend lots. We would pay to raise and educate them just as we pay for everything else, by saving money.

          My parents only paid for a small portion of my college education, and I think the lessons that I learned from getting out of debt were priceless.

          There are people on the extreme early retirement pathway with children, so it certainly can be done. You just need to prioritize, focus, and realize that it is not entirely in your control (such as illnesses and disabilities that you gave as an example). Who knows what the future has in store for us; that’s why we like to save as much as possible now to plan and prepare for it.

          • jim

            Good for you and best of luck!

Leave a Comment

CommentLuv badge