To retire rich, there are only 2 solutions. The first solution is to earn more. The second solution is to spend less.
To earn more, this is what you do:
- Build a Second Income
- Retire Later
- Start Saving Today
- Reduce Your Expenses Drastically
- Move to a Cheaper Place
The steps look simple or sound simple but it is damn hard to achieve. Let’s look on the following to see why based on my personal experience.
Build Second Income
I have been trying very hard to build a second income but so far I don’t see any good progress. The second income that I got is not even 5% of my current income. Maybe my current income is too high? I will be a dead man, if I’m forced to leave my current employer now.
As for retire later, I’m not sure if this is really possible. Retire later means I extent my default retirement age. Instead of retire at 55, I can retire at 60 or 65. By extending my retirement age, I actually earn more and I save the extra money that I earn.
There are 2 things that I worry here. First, will I still be working until 55? Am I still as useful as when I was 30? Will I be laid off by my employer before 55? Second, what makes the company approve my retirement age extension? Opss, I almost forgot my ultimate goal is to retire by 40. I want to retire early instead. So why do I still consider this option? I want to avoid this option!
Start Saving Today
Finally I think at least I’m doing this very well on this. I have been start saving from the day I start working and use the saving to invest in stocks, mutual funds and properties. If you find saving is really difficult for you, I would recommend you to use the “Pay Yourself First” method. It is a very efficient method.
Reduce Your Expenses Drastically
The truth is that many of the things we accept as needs today are actually just wants. For example, 30 years ago, few of us had television sets in their homes. But today everyone has a TV in their homes. Not only just TV, people know moving towards to LCD TV including myself.
We all want a better life. So, should we have better life? Do not watch TV at all? I buy laptop instead of desktop because I want a better life. I now can update this blog by laying down in my bed. Should I buy Dekstop instead? Also, when I looked my expenses past few months, I bought a car, I bought some furniture, and etc. It looks like spending is really fun. Don’t you think so?
Move to a Cheaper Place
Move to a cheaper place might not be a solution to some of you but this is the one step that will make the most difference. If moving to somewhere else with lower living expenses and you are able to increase your net worth, why not we go to that place? The biggest problem I have right now is my current expertise or skill does not have any market value in the cheaper place that I want to move to. Move there but lower my income? What is the point then?