How to ER: 5 easy habits early retirees practice everyday

Published June 29, 2016   Posted in How to ER

The habits of early retirees tend to be profoundly powerful, yet strangely simple. We all know that early retirees “save money” – that goes without saying. But what else? And how many of these lifestyle techniques could be picked up and mastered by anyone? Probably more than you think.

These habits work, and work well. We practice them all the time. Most early retirees and future early retirees practice these and, dare I say, have mastered them. And chances are, if you share our dream of retiring early, you probably follow many of them, too.

People playing the guitar on the beach

Early retirees are just free spirits, belting out rythyms on the beach.

The 5 habits of early retirees

They prioritize retirement over spending money – Clearly, early retirees save money. How much? We save around 70% of our income every month. Some save more while many others tend to set their sights on saving at least 50% of their income. Whatever the percentage, early retirees just SAVE A TON. Not only does this habit help acquire the wealth needed to see early retirees through their much longer retirement timespans, but it also helps to establish healthy lifestyle decisions, like living sensibly, understanding “enough” and recognizing what truly makes us happy in life.

Remember, even if you aren’t pulling in 100 Gs a year, early retirement can still be for you.

How we are following this habit: We save as much as possible. Literally, it is as easy as that – I realized that the more we save, the earlier we can retire. My wife and I now prioritize retirement over spending money by saying “no” to invitations to dinners and sporting events, or anything that costs money that won’t bring genuine happiness into our lives. No more $100 date nights, or spending cash on cable or satellite television, or an expensive phone. These changes have made a world of difference and believe it or not, neither of us feel like we are “sacrificing” happiness, because those things never TRULY made us happy to begin with.

They understand where their money is going – One of the best ways to save is by knowing where your money is being spent every month. I haven’t met very many early retirees who don’t have a precise understanding of how much they spend – AND ON WHAT. This process need not take hours and hours to keep up with, either – once your initial system of tracking your expenses is setup, maintaining it should be as easy as plugging numbers in – and sometimes, not even that! Applications like Personal Capital and Mint can help you get started. And, this is how we approach tracking our expenses.

How we are following this habit: We meticulously budget and know where every dollar that we spend every month is going. My wife takes the reigns on this and knows how much we spend on, say, potatoes from month to month, or gas for our cars as well as discretionary spending that we choose to drop money on (I enjoy Vodka tonics in the evening, for example, and we account for these kinds of expenses within our budget). We have a category in our budget to account for every dollar that leaves our bank account, and whenever we feel like we’re spending too much money, this is the first place that we look.

They get out of their comfort zones – I wrote about this recently – the ability to escape our comfort zones helps our ability to retire early. Like I wrote about before, getting out of your comfort zone is a mind-game. Spending is an addiction, and people’s minds keep planting the seeds of comfort within the decision-making process.

Getting out of your comfort zone means engaging in uncomfortable conversations and NOT choosing the status quo when making decisions. It’s about looking people square in the eye as you walk past them rather than avoiding eye contact. For an introvert, it’s about willingly introducing themselves with ease at a dinner party.

It may also be telling your boss that you’re retiring even though he or she is 20 years older than you.

How we are following this habit: I keep myself out of my comfort zone by trying new things – even small things, like food, can help train your mind to entertain the option of avoiding the trap of comfort. Changes in my diet happen to be a substantial reason why I feel so happy and healthy. I switched to a primarily vegetarian and vegan diet when cooking at home with my wife, a change that I would never have considered before. I was a meat-eating machine. That was my comfort. Since I married my wife and started embracing a new way to eat, my energy has increased, I’ve lost quite a bit of weight and I just can’t wait to go to the gym every day.

How does making a change to your diet apply to early retirement? Spending works the same way. I used to spend like it was going out of style. Cars, motorcycles, restaurants, HD satellite service…yeah, the basic shit that Americans spend their money on.

Finally, I stepped outside of my comfort zone and said no more.

I began making uncomfortable decisions, like:

  • I stopped buying crap and saved my earnings instead.
  • I sold my precious Corvette that I thought I loved so much.
  • I also sold my Yamaha R1 sports bike that drained me of hundreds a month in insurance.
  • I downsized my belongs to only those things I’ve used in the past year.
  • I began saying “no” to restaurant invitations and expensive travel.

In other words, early retirees make decisions that are in line and supportive of their financial goals and do not let society or friends/family affect their financial situation – even if those decisions are uncomfortable.

They tend to be extremely optimistic – Certainly, if you’re looking to retire early and enjoy a life outside of the office, you gotta be pretty damn optimistic about the future. The thought that your stash will last you 30, 40 or even 50 years or more without having to work means you’re generally positive about the future and believe that things will work out.

This level of optimism applies to everything in life, not just early retirement. Early retirees take a glass half full approach to most things, from making life-altering decisions about work to picking the right wine to sip on during dinner – and everything in-between. They expect things to go well, and as we know from the powerful placebo effect, this phenomenon is very real.

After all, how many early retirees do you know that are mad all the time?

Note: Of course, we are not talking about “blind” optimism. Early retirees are always wise to plan ahead and account for when things do not go as planned. One must be a realist and understand the realities of the world while letting optimism take us to some truly amazing places in life. It definitely has for my wife and me.

How we are following this habit: Except when it comes to my fantasy football team, I’m a damn positive person. So is my wife (luckily, her fantasy team is superior to mine!). We believe in the general goodness of the world and don’t let the evening news cloud our outlook on life. Over the years, we have realized that attitude is an important key to keeping your head on straight, and our positive attitudes help to bring us through each and every day as we work towards financial independence and early retirement.

They spend money on experiences, not things – Things lose value, but early retirees understand that experiences tend to appreciate within our heads. Today, I would much rather take an inexpensive vacation to somewhere I love (like Sedona, AZ for example) than get stuff wrapped up as gifts. Early retirees are over “stuff” and have often found that the less stuff they have, the more simple life becomes. Why? Maintenance and Storage, baby! Who wants to spend 50 years of blissful retirement with a bunch of crap in the closet to deal with every time the door is slid open? Not this guy.

How we are following this habit: Both my wife and I don’t want stuff anymore, so we get each other the gift of experiences. Last Christmas, we took a trip out to Key West, FL. A couple months ago, we visited the Albuquerque Hot Air Balloon Fiesta. Also in 2015, we hiked beautiful Glacier National Park and began the year in Orlando, FL for a Disney World family vacation.

Remember, travel does not have to be expensive. Credit card hacking is one technique to keep costs low, and the willingness to stay outside of PRIME locations helps tremendously as well. Drive instead of fly when you can and it makes sense. In Glacier National Park, my wife and I stayed outside of the park to save substantial cash.

Are there any other habits that you have noticed among early retirees? What habits have you developed that help you to achieve your retirement goals?

We track our net worth using Personal Capital


28 responses to “How to ER: 5 easy habits early retirees practice everyday”

  1. I find the last two points here the most interesting. I never thought about how optimistic FIRE people are, but I think it’s true. Definitely true of my husband who first brought up the possibility in our household. Also, being willing to challenge oneself and try uncomfortable things. I think this can be really valuable for career growth as well as personal growth (and saving money). So it makes sense that it’s a common trait here.

    • Steve says:

      Thanks Kalie, appreciate the comment. Yeah, you almost *NEED* to be optimistic to think that early retirement will work. At the very least, I think that optimism will lead to a more flexible lifestyle so, if you do need to take on some part time work here and there, it’s no problem. Just goes with the territory! 🙂

  2. Wow Steve – I love this post! “engaging in uncomfortable conversations and NOT choosing the status quo when making decisions” – as a teacher, doing what I have done has been very uncomfortable (leaving the profession with many years in – but not being old enough to retire). I finally have my “feet under me” and am willing to share what I have done (when people choose to ask me about it). I try to practice humility but want others to realize ER can happen on the less than 6 figure salary too. Making uncomfortable decisions is where we are as well – and it feels good! We focus on experiences over stuff too! Awesome read – thanks for aligning your thoughts so well with “where we are” too!

    • Steve says:

      Thanks, Vicki! It’s interesting that those uncomfortable decisions eventually turn into a decision that will make you very, very happy. 🙂

  3. I think your list of habits sums it up pretty well. My wife and I follow them pretty closely. This may play into habit #1, but to help us build our savings for ER we sacrificed convenience for money all the time. We mow our own lawn and clean our own house, we do DIY projects, we repair things ourselves when possible, the list goes on and on.

    • Steve says:

      Thanks Green Swan. Yup, we found ourselves doing more and more of our own work, too, after we made the decision to quit early. Paying someone else to do it just wasn’t worth even another month of working full-time. No way. 🙂

  4. Check. Check. Check. Check. Check. Awesome list, by the way. Regarding spending on expensive dinners, Mr. TJL had to convince me last night to take me out for a birthday dinner. I am still squirming over the unnecessary expense.

    • Steve says:

      Ha! A little indulgence every now and then isn’t a big deal, but yeah, I know how you feel. The spending money to celebrate thing just doesn’t feel right to me, either. 🙂

  5. Stockbeard says:

    I guess under my several layers of cynicism and sarcasm, deep down I am actually optimistic about my and my family’s future.

    Good article as always 🙂

  6. I think this is a pretty accurate list. As an ERed person, I can honestly say I do/did most of these things without even thinking about it. They truly are ‘habits’.

    • Steve says:

      Thanks for reading, Mr. Tako. Yup, and the more we do those things, the less we even need to think about them. They become second nature.

  7. Mr. SSC says:

    Man, points 1 and 2 were key in our ER plans. The other ones just fell in line after the first 2, but wanting to know where your money goes every month I think is the first step. Then you can say, “Whoa, I spend how much at Starbucks/Restaurants/clothes each month?!” Then you can decide whether it’s worth it, and like almost everyone here, we decided it wasn’t worth it to us and we’d rather be done in a couple more years.

    The eternal optimism is definitely Mrs. SSC. I can be more optimistic than most, but that is a fairly common trait it seems like with FIRE folks.
    Those uncomfortable conversations have gotten way more comfortable now that I’m more comfortable with ER and sold on it. I realize I don’t have to sell anyone on it, I can just try and plant a seed that “the norm” isn’t the only way to live life.

    • Steve says:

      Yeah, I don’t try to sell anyone on early retirement either. It just adds undue contention to the conversation, and quite frankly, early retirement isn’t for everyone. If someone would rather live a more traditional lifestyle and work longer because of it, great. That’s up to them. 🙂

  8. I think the key really is just prioritizing savings. The rest of the steps stem from that. Once you realize retiring early is more important than other things — well, those other things lose value. So you’re okay cutting cable, selling expensive things, stopping any collections.

    We’re not interested in ER, but I am going to be prioritizing retirement savings next year now that we’re rid of the worst of the looming expenses.

    • Steve says:

      There is a snowball effect here, isn’t there? Once you build a foundation of knowing exactly where your money is going, everything else gets much, much easier.

  9. Your optimism point is super interesting — I think you have to be optimistic to even entertain the notion of early retirement. But I wonder if most of us are some elusive blend of optimism and realism, because virtually all FIRE bloggers talk about the various ways they stress test their magic number or the contingency plans they have in place (wait, maybe that last one’s just us? haha). I think someone who’s 100 percent an optimist won’t necessarily do the hard work of facing down economic realities, scrutinizing safe withdrawal rates and questioning even unconventional conventional wisdom. And a 100 percent realist won’t have the imagination to see early retirement as a possibility. So maybe we’re all the rare unicorns who are optimists and realists in equal measure, or at least that’s my theory for today. Whaddya think? 😀

    • Steve says:

      I think there is a lot of truth to that, actually. With us, I am definitely the optimist and Courtney is more of the realist, so basically nothing gets done around here without her being involved. And that’s a super good thing, because her conservative nature will hopefully prevent me from getting *too* risky. 🙂

  10. Mr. PIE says:

    We have alway spent money on experiences before we considered FIRE, stil do I now and I am sure it won’t change going forward. The difference now is watching carefully what is spent on those experiences and the use of travel hacking to make it even more economical.

    Mrs. PIE has had a few conversations at work recently where she has gotten an incredulous look when mentioning travel hacking. At the same time she found colleagues who are into it big time so the smart stuff about travel hacking is spreading more and more.

    Executing against the PLAN with relentless focus is one I woul add. Yet adaptable enough to go to plan B, C etc. Plan, plan plan. Perhaps this is more of a quality or behavior yet it becomes so emgrained it morphs to a habit.

    • Steve says:

      Hey Mr. PIE – my wife is definitely the planner in the family. If it were up to me, I’d just pick a date to quit my job, then go driving down the road and stop, well, where ever I happen to stop. I fly by the seat of my pants, so I definitely need someone around to keep me grounded! 🙂

  11. Thanks Steve, for sharing these habits and relating them to your personal experience. The illustrations are very helpful.

    My favorite is the suggestion to spend money on experiences, not things. Have you noticed that many people today, regardless of the generation, don’t REALLY enjoy experiences because they’re too busy recording video or taking pictures to be in the moment? That drives me crazy.

    • Steve says:

      People are distracted a LOT these days. Check it out – I’ve seen people at the gym reading a newspaper while on an exercise machine. No, not a treadmill. An actual resistance machine (leg extension), completely distracted by whatever they are reading. I guess the last thing that you’d want to be, while at the gym, is actually focused on what you’re doing! 🙂

  12. Great list – certainly rings true for us. I also notice that they devote a lot of time to their health and relationships. These are the things that drive long-term happiness and can’t be tracked in a spreadsheet.

    • Steve says:

      Thanks MrFireStation. True, very good point about their health and relationships. Those two elements substantially affect your quality of life, no doubt about it.

  13. LazyFIGuy says:

    Interesting observations that I think most of us on the path to FIRE understand, but probably have taken for granted. As I read through these habits, I tried to see if I could come up with some not mentioned (and I probably won’t come with anything new). However, it got me thinking about a trait that’s probably intrinsic to all FIRErs; facing adversity head-on.

    I would argue that to pursue FIRE and be successful, you’ve got to have grit to face and conquer the obstacles that you encounter along the way. We may not be actual mountain climbers, but we are definitely psychological mountain climbers. After all, it takes a lot of fortitude to reach the peak of the FI summit.

    • Steve says:

      Very true, LazyFIGuy. Psychology plays an interesting role in all of this…just believing that cutting off your source of income at such an early age can definitely be a mental puzzle…not only making it happy, but believing that it can happen. A part of this, I think, goes to optimism.

      Thanks for the comment!

  14. For me, and for many others I assume, the biggest challenge has been the “stuff.” Making money came relatively easy. Although as a freelancer, making money in the beginning is more difficult than making money in a job.

    But breaking the spending habit is what requires behavior change and real willpower. Once you make a conscious decision to stop the frivolous spending, it gets easier. Just taking the first step was the hardest.

    Thanks for sharing some of your good habits. It’s easier to replace a bad habit with a good one than to just quit cold turkey.

    • Steve says:

      I definitely agree, Financial Slacker – the first step always seems to be the toughest, but once that initial step is taken, the road has a way of getting easier and easier to travel. The closer we get, the easier things become.

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