How to Retire 15 Years Early

How to retire early All the clamoring on about retirement is around, “How much should you save? Will you save? Can you save??” David and I look at it differently. We look at it as how much should we not be spending? And by not spending, what are we saving? I figured it out lately – based on David and I’s life choices we are spending in the area of $2,055,000 less than many of our peers – over the course of a few decades – meaning we can ultimately work less and retire early.

Here are six decisions we have made to help us do so. (Please note, the costs noted in here will vary depending on where you live. We live in Denver where costs are a touch higher than average, but drastically lower than many of the major US cities.)

1. We Believe Just Because We Could Afford a Nicer Car – Doesn’t Mean We Should Have a Nicer Car

David and I drive a 1999 Subaru. We paid about $4,000 for it. Now, we could afford a nicer car and trust me, there are many a days where I wouldn’t mind one, but the majority of the time I think about it as much as I would nicer wheels – it gets us from our house to restaurants, to meet friends, to the grocery store and to trailheads, and it does so all without the worry that when someone can’t parallel park and rams our bumper, or as happened just this week, someone sitting next to us at a light decided to hurl their half-melted red Dairy Queen shake out the window at our car door – well we care a whole lot less.

Before David convinced me to buy a used car, my previous lease payment with insurance was about $500 per month or about $6000 per year. Today we pay about $600 per year in insurance for the car and about $1500 per year in maintenance and repairs.

buying a new car versus buying a used car costs how to retire early

2. We Only to Have One Car

And our 16 year old car is the only car we have. Our other forms of transportation are two bikes. David bought his at the Denver Police Bicycle Auction for $175ish (highly recommended for someone looking for a used bike and a good time, if you don’t live in Denver there is likely a similar auction in your area) and I bought mine for $30 at a garage sale.

For my birthday, David bought me a Thule bike basket – which although roomy enough to fit at least two (maybe three) bags of groceries – is not at all a nuisance. (It is in fact, a grocery getter and a built in fitness plan all in one.)

When I / we are too lazy to bike, the weather is too crappy or we know we will be having a few drinks – Uber is our second set of wheels. (And frankly, if we were going to have a few drinks – and had two cars – Uber would still be our additional set of wheels.) We probably spend $30 to $50 per month on Uber and will certainly spend much less once the weather is nicer, but it is a great alternative to both a second car – and a DUI.

buying a new second car versus buying a used second car costs how to retire early

3. I Work from Home

One day I will write a post, The Cost of Working, and in it I will detail a little reality of work few discuss or even realize – and that is this – so much of the reason we have to work – is to pay for – going to work.

Let me explain, because I have the world’s most wonderfully amazing job at the most wonderfully amazing company which allows most of their employees to work 100% remotely (which is super wonderfully amazing) – I do not have to pay for the following:

  • Parking: To park a car for the day would be $5 minimum in Denver, if I was willing and able to park in a lot with a decent walking distance to work. It would cost more along the lines of $8 to $12 a day to park in a better location.
  • Dry cleaning: I haven’t done this in so long to be honest I am clueless, but I am guessing at the bare minimum $40/month and for those with a closet of nice clothes, probably around $200/month.
  • Work clothes: $500/year (bare minimum) up to, as a friend of mine from NYC recently told me, $500/month.
  • Transportation: If I had a job where I did not work from home we would need another car, gas, insurance and maintenance to drive to work or we would need to pay for public transportation. Estimated costs would be  $2100 / year for a used car, $6000 per year for a new car and public transportation in Denver would be around $2400.
  • Food: Lunches I was too lazy to prepare the night before would start to add up and would likely average $30 – $50 per week average

Also, because I work from home, my wonderfully amazing company pays for:

  • My Internet , $60 per month
  • My cell phone, $125 per month

best case scenario cost for going to work how to retire early

worst case scenario costs for working how to retire early

4. We Live Outside of Denver

I never, ever, ever thought I would live outside of Denver. NEVER. I built my entire adult life in Denver. A Denver zip code, as absurd as it may sound, was a fundamental part of my identity. (I mean, I love Denver so much, I even wrote a book about it.)

Then I wanted to buy a house and realized if I just moved across the street from Denver, the house that would cost us $530,000 within my beloved zip code, would cost $330,000 four traffic lanes over.

And this is what I think most people forget (I certainly had), when you buy a house that is $200,000 less than another – you are not saving $200,000 – you are saving $400,000 over the lifetime of the mortgage.

To use an example to explain, when you buy a house that costs $330,000, if you take 30 years to pay it off, over the course of the loan you are really paying almost $660,000 for it. (Banks are freaking clever, aren’t they?) If you buy a house that costs $530,000 you are effectively paying $1,060,000 over the 30 years you are paying it off.

Did my ego require me to pay an additional $400,000? Did it require me to pay almost an additional half of a million dollars more for a zip code? Nope, it certainly did not.


paying off mortgage early how to retire early

5. We Don’t Have Kids

We did not decide to be childless, simply because the expense would make it more difficult to retire early, but not having kiddos does turn out to be enormously helpful in doing so.

Baby cost calculators estimate if we were to have a kiddo today we would pay over $22,000 per year, per child. This equates to $245,340 for the first 18 years of one kid’s life. Now what we need to remember is to have $245,340 to spend we actually need to earn $314,035.20 to give the state and federal government their 28%.

To further complicate matters, my guess is if we were to take the plunge into Kiddo-dom we would have more than one. We both have multiple siblings, and I think it would be important for kiddo to have the same. The first 18 years of two kids’ lives would cost us over $490,000 and three kids would be $735,000 and as said above, we need to earn 28% more than that to get to those amounts.

This is all before college costs, which for a high school grad entering entering a state university today is estimated at $97,000 for a four year degree. Need to take out a loan? That education will be $200,000 when finally paid it off bringing the total price of having one child with a four year college education without loans to $342,340 or $442,340 with college loans. (Re-thinking how important college is really? Read: The Only 3 Reasons to Go to College).

cost of having kids how to retire early

6. We Will Pay Off Our Mortgage Early

It took me a long time to understand amortization schedules but once I understood them, I also understood a new way to help us retire early. Below is a 2015 amortization schedule for a rental property we own. Our monthly payment is $946.28. In January 2015, $269.57 of the $946.28 mortgage payment for the month went to paying off the actual loan while $675.59 went to paying off interest.

Now, if we were to take money from our savings, let’s say $3,309.99, the total principal amount that would be paid in 2015, we would not have to pay / we would save $8045.40 in interest off the total cost of the loan. We would also cut off a year of paying our mortgage payments.

amoritization schedule how to retire early 1

Now if in 2016, if we were to pay an additional $3479.34, the amount of principal that would be paid the entire year, we would be saving $7,876.05 in interest and another year in mortgage payments. In other words, if between 2015 and 2015 we gave an additional $6,700 towards the principal of our mortgage we would not have to pay $15,900 in interest over the course of the loan!

amoritization schedule how to retire early 2

And the amount of money we will NOT have to earn via making these decisions?


how to retire early final totals

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