For me the motivation to spend well below capacity is not reaching for early retirement– it’s really about not having to worry about getting laid off and possibly being out of work for a very long time. My financial cushion has allowed me to take on more risky assignments, and also to slack off in front of management when it suits me. Early in my career I found that I liked some parts of my job far more than others, but it was a package deal– or so I thought. Now I just trim off the pieces I like and leave it to my co-workers to pick up the rest (for me it’s the powerpoints and meetings I avoid). Fortunately I’m pretty good at doing the stuff I enjoy so it’s been win-win. And if a new manager hires in and wants to change the rules on me, I can look him in the eye and give him the “go ahead make my day”. So for me working inside a large organization became fun after I got to be the axe.

Of course the downside to my approach is that I’m never getting another raise or promotion (although I’m still in the bonus pool), but that’s a price well worth my freedom in my opinion. This also won’t help those who aspire to supervisory positions, as my attitude is obviously unsuited for management. Fortunately I saw early enough that would not be what I wanted to do, so I avoided getting trapped on that road.

Anyway my point is that even if you love your job, it’s still worthwhile to make some sacrifices early on to get into the position of not having to worry about stuff that keeps many people awake at night.

Oh and a tip for Jacob– fresh produce is very expensive at the national grocery chains here (and not just WF) but you can get amazing discounts at ethnic grocery stores. Sometimes quality is iffy, though, so you have to look carefully before you buy, but the savings can be pretty substantial. Also you can be sure that packaged goods will be very expensive at these stores (that’s where they make up their losses on fruit & veg).

We’re not vegetarians (although we’re trying to eat less meat), but have found them to be great for discounted bacon etc. that starts off with a 30% discount and then has another 30% taken off after 3-5 days as they need to move on to the next offer.

The freezer is our friend when it’s possible to fill our boots with good quality cuts (normally German and boy do those germans like their meat!) for a fraction of the price of the same quality from the ‘regular’ supermarket!

That being said, I did not need $2M to ER 2 years ago. I did not have even $1M but my investments have since risen to over $1M. My annual expenses are still only $22k, so my SWR is just over 2%.

I first experienced this when I hiked the Pacific Crest Trail. I would have all kinds of magic happen to me. For example, one day just when I was wishing I had a better hat, a hat appeared on the trail hanging on a stick in my favorite color! At one point I accidentally sat on my sunglasses. I wore the broken glasses for only one day when I noticed a pair of sunglasses hanging from a branch in a tree. When I needed to go home suddenly, I needed a carry-on bag for the train. While walking down the street in a small town I stumbled on a bag full of giant purses. Free carry-on bag. And so it went.

If trail magic is real, why couldn’t there be the same magic all the time? Turns out there is. You just have to tap into it. It’s so much more fun to live this way. It happens to be cheaper, too. Choose the items to do this on. If red peppers isn’t your item, find something that is.

This is a question of life choices, though. If your goal is to have a high disposable income after 40 years, then your plan sounds reasonable.

Do you think you will ever buy property at all – or will you continue to rent? perhaps an idea for a post?

I enjoy your blog.

Claire

@ Thrifty Canadian – I have frequently wondered where the official(?) $250k/child estimate originates. Otherwise I agree with the numbers. If I had kids I would make it clear from an early point that if they wanted to go to college that they better study hard enough to get scholarships or otherwise pay their own fare e.g. probably living at home while attending the nearest community/state college/university.

I think it’s also possible to live in a rental basement while having 3 or 4 or more kids and actually be paid by government to raise your kids. After all, Canada needs new labor force and one earns the benefit to supply the future labor force. In this case the expense of raising kids is negative.

I personally choose to stay balanced. I own (or my mortgage/bank owns) a modest town house since I’d like to have bigger space for kid as well as a backyard.

In a bare bone situation I calculated the only cost would be diaper and very limited clothes bought from thrift store. You can definitely have kids for less than $100 a month. (that’s before s/he enters college.)

Thanks for the info. It seems like a pretty bare bones sort of living – do you take vacations or have any sort of expenses for dining out or going to bars? what about clothes or hairdressers or dentist etc? Do you still work or do you live of investment income?

thanks

Claire

A few years ago I came up with 1 million to give me one hundred dollars a day. Your model seems to be more up to date. Where did I get the idea of $100/day? I bought a motorcycle in England and rode it across Europe for six months on about $100 a day before coming back home to the States. When I got back I rode a bicycle across Northern Illinois on about $40/day (that includes the eqwuipment and food!) More on that at GITride.com

The idea of conserving and saving instead of spending goes against the grain of American consumerism, but the lifestyle you are supporting seems to be, no *is* the right thing to do. I’m RSS’ing this one

I’ve retired twice already, I am hoping the third one sticks!

$2,000 Mortgage payment + tax + fees
$150 Utility (DSL and cell paid by company)
$220 Auto insurance and gas for 1 car
$650 Day care for 1 child
$450 food/discretionary dining
$200 other (diapers, toys etc.)

——-
$3,670

A pretty good 2 bedroom apartment with easy access to subway costs around $1600 with heat and hydro included. We’ll probably be living there without a young child.

Driving the kid to day care cost at least $30 a month for gas.

I can argue that the kid costs us $550(extra housing) + $650 (Day care) + $75 (gas and other). The total is $1,275 a month.

($3,670 – $1,275) divided by 2 = $1,200 per person.

When I compare the expense of raising the little one to the joy of that, I do think it’s one of the greatest bargain I can get.