How to Retire Early After Working Hard

I bet you don’t understand money.

I bet if your income doubled, you’d be poorer.

That probably sums up 95% of people I’ve ever met.

Mike asked me to write a blog type thing for the Decorators Forum UK after posting that I’m 45 and retiring at 50. I want to explain how to retire early. I’m a decorator, but the same applies to any job.

This will be a ‘too long, didn’t read’ post, so don’t bother going further if you don’t want to do anything about your finances. Also, I’m not selling anything, these are just my thoughts so no worries if you disagree, if I can help a few people see a way to get what they disprove from hard work then it’s worth it.

Apologies if I come across as arrogant, it’s not meant to be like that, I just want hard working people like us to get somewhere when the system seems geared against it. Without going all hardship on you, I wasn’t born into money, didn’t get given or inherit any, I just saved hard and smart. I always wanted to retire early and be comfortable.

Most people have the chance to be wealthy regardless of income, it’s got nothing to do with cash in the bank, cars or ‘stuff’, it’s to do with getting wealthier every day whether you work or not. A big shot footballer is rich right? If they lost all income today due to an accident, how long until they’re broke?

If you stopped working today, how long until you run out of money? For me, I earn more than I’ll spend today without working, I have assets that pay for that, the surplus buys more assets which gives me extra income. I can only get wealthier, simple right?

I’ll summarise what would be a very long book, but the points are the same.

Firstly, you need to spend less than your income, no matter how much that hurts. If you spend more than you earn, then surely it’s obvious that it’s not sustainable? That your income will be paying interest on the debts you took for sh1t you didn’t need and were too impatient to wait for? Aim for 10% of your income being surplus. It’ll mean a bit of short-term pain, maybe losing a few treats but if you carry on as you are then nothing changes and you’ll retire at a normal age.

The extra bit over goes into buying passive income. For me it’s saving up for rental house deposits, it can be any asset that you take time to understand that pays an income (shares, bonds, property, investing in a business etc). Always make sure your income exceeds your outgoings, the assets will start to grow and give income, keep your spending the same and that will snowball. You need a bit of research on this to understand what you’re doing but no more than you put into researching the next car you want or which sprayer to buy.

Don’t increase any spending until your income far exceeds it and you will continuously get wealthier.

For me, my houses pay me enough to live on (I live modestly, but nicely). My wages save up for deposits to buy more houses. The rent from the additional rental houses accelerates the time to buy another. It took 5 years to save the first deposit, I get a deposit every year now.

My sister and brother-in-law are the opposite. They have 2 good salaries coming in, no kids either but just get poorer. Their wages pay off (some of) the credit cards, this allows them to buy more crap, new TV, new phone, sh1t they don’t need all on credit.

They don’t own their house, all their possessions are worth less than the outstanding debt, they are worth less than zero. If their salary doubled? They’d have bigger credit limits and would get further in debt, it happens every time she’s promoted, she buys a more expensive car! She’ll work until 65 and then I’ve no idea how she’ll even clear her debts to have a retirement. She’s like most people.

These are just the main points to get you started but it makes sense. You don’t have to go hungry to do this, just be smart with money. Why bother earning it if you’re just going to waste it? It’s hard being a self-employed decorator, you should have something to show for it.

Further reading I’d recommend in order to help understanding money:

Rich Dad, Poor Dad (to understand how to use money)

Richest man in Babylon (to understand how to save)

Millionaire next door (shows how many people like us are the rich ones, not the doctor on £120k)

Please note: these are just my ramblings, be careful when investing, especially with property, I know a LOT of sharks selling courses. The free ‘courses’ are just a hard sell, all the info you need is out there for free on the internet.

Final Thoughts on How to Retire Early

I’m just one person, and I’m sure people who are much more successful than me do things differently. However, I know my formula works. Put 10% of your income away every month, no matter how skint that makes you in the short term.

Put it towards an investment, whatever that may be. It could be a rental property, or premium bonds. Maybe stocks or a high-interest savings account. Whatever it is, do it. As long as it increases your income.

Just keep putting that 10% towards your investments until it snowballs. I’ll see you on the beach when you’re 50….

How to Retire Early – by Craig Williams