Jacob, of EarlyRetirementExtreme.com, is getting destroyed in the comments section of a Yahoo! featured post called ”Early Retirement Without a Fortune.” For some reason, Americans (mostly) can’t seem to fathom that IT IS ABSOLUTELY possible to live comfortably off of $7,000 a year, or at least close to it. It all depends on how we define what’s comfort, though. Comfort to Jacob, apparently, is forgoing the “wants” that so many other people consider as needs.
If we were given a clean slate, I believe that we all can live off of much less than we spend, we just CHOOSE not to. Most of our choosing are subconscious, though, so we’ll never be able to understand how Jacob did it–lived off of $7,000 annually for more than a decade and invested the rest of his money.
The way we spend is measured against what we feel that we need, which is driven by the psychological requirement that forces most of us to keep up with the Joneses. We need a new car every few years. We need to have snacks in the house. We need to go out and eat at fine restaurants on the weekend. We have so many needs, but we never think to calculate how far these needs sets us farther from a $7,000 annual living level.
Hell, most people spend $1,200 or more, per year, for just their cellphone plans; $1,500 or more, per year, on cable television; and $6,000 or more, per year, on car payments. These values add to over $8,700 a year! Additionally, most people’s annual grocery spending adds an additional $6000 to this number if they spend an average of $500 monthly, so now we’re at $14,700.
$14,700 later, and I haven’t even began to focus on housing expenses. If someone has a mortgage of $1,000 or more, including taxes, that’s now an additional $12,000 a year just to have a roof over his or her head. I dare not to talk about other expenses, such as dining out, fuel costs, clothing, alcohol, gift giving, etc.
There are so many of us who spend way more than we need, but cry that we are broke, or that we don’t have any money to save. But again, people don’t believe Jacob, so they are berating him with unnecessarily hateful comments–The same type of comments that led him to end writing on his blog. Instead of being a skeptic or non-believer, those “commenters” should try making adjustments in their own financial life.
In fact, here are some ways that someone can guarantee a total savings of at least $500 per month, if they are crying that they’re broke or don’t have money to save, and want to adapt some of Jacob’s ways.
Cellphone plan – Get rid of it. PERIOD. (Savings – $100 monthly). Cellphones are a convenience, not a necessity. If the “necessity” of a cell phone comes up, just ask the person standing next to you if you can use their phone. You can be certain that they are paying over $100 for their plan and have plenty of unlimited minutes to spare. Alternatively, go prepaid by using Boost or Virgin Mobile, or better yet, a prepaid minute reload phone. (Savings: $50 or more, monthly).
Cable, Internet, and Land Line - Cut it. PERIOD. Check out books, music, and DVDs from the library for entertainment. And use a Magic Jack’s “land line” to call your friends when you are at home and your office phone to call them when you are at work. If you’re not using the Internet for business or education that will led to an increased pay, cut the Internet, also. (Savings: $150 or more, monthly) If you can’t completely shun yourself away from television, purchase a HDTV over the air antenna and watch free broadcasting channels such as NBC, ABC, PBS, and CBS.
Groceries – Eat for fuel and not pleasure. A box of pasta and a jar of sauce cost less than $3 and can feed a family of four for two days, including lunch meals for the adults. Therefore, one can potentially eat a week’s worth of dinners for less than $12. For breakfast, a family can eat oatmeal or grits for a week with less than $5. So, realistically, someone can feed a family of four for only $100 a month. (Savings: $400 or more, monthly).
Dining Out – Don’t do it. AT ALL. (Savings: $100 or more, monthly)
These suggestions can go on forever, until you, too, can live on just about $7,000 annually.
The problem is that we just don’t want to do it–we’d rather cry broke than to sacrifice the things that are wants but has somehow become our needs. If we don’t want to live extreme lives, I guess we don’t have to, but this is no reason why we should belittle the ones who do.
If you do want to try out Jacob methods, I suggest you dig into his blog or purchase his book.
Question: What can you cut out, but won’t, even though it’s costing you an earlier retirement?
My answer: Dining out and purchasing alcohol cost me about $300 per month, which equates to $1,200 per year, or $36,000 over 30 years.
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DisclaimerThe opinions expressed on this blog are mine and represent my views only. I have very strong opinions, but am also an open-minded individual. If you refute my view with supported, educated and well-argued points, I could very well change my opinion.