Snowball of Early Retirement

Published October 12, 2016   Posted in How to Retire

The Snowball of Early Retirement – it is a remarkable concept that strikes deep at the heart of how people achieve financial independence and early retirement. It’s a phenomenon that makes ER easy and no assembly required. Just add momentum.

Pinterest: Snowball of Early RetirementI stumbled on this phrase quite by accident writing a blog comment.

The comment was written on Our Next Life‘s post about the magic is real. Basically, these folks are kicking ass. They are way ahead of the game financially and have fully prepared themselves to tackle early retirement head on – and ahead of schedule.

Like Mr. and Mrs. Our Next Life, Courtney and I are also ahead of schedule, blowing passed our net worth goal several months early. We overachieved in our goal, just like they did.

And here’s the remarkable part in all this.

We are not the only ones who hit our goals early. As I become more involved in financial independence and early retirement, the more I realize how common this is. Most of us achieve our goals early. The majority of early retirees lean into retirement with more than they had anticipated.

And that’s truly wonderful! But it also begs the question: why? Are we just some special breed of people who magically win at everything we do? Trust me, if there was some Easy Button to early retirement, I would learn how to reproduce them and sell it on eBay for millions.

The Snowball of Early Retirement

Mr. Snowball!

Early retirement is propelled by the snowball effect. We tend to achieve our goals early not because of some magical force that only a few of us possess, but because things get easier the more we do them. Strangely enough, this is a very common phenomenon in many walks of life.

When we first learn to play football, for example, we suck. We don’t know how to tuck the ball and run. We don’t finish tackles. We couldn’t lead a wide receiver and place the ball right in the numbers to save our lives. But, the more we practice, the better we get.

And the better we get, the more dedicated we become. Naturally, we humans like doing things that we are good at. We like to succeed. It feels great. The better we get, the more we practice. The more we practice, the better we get. It’s one of those good “spirals”, pun very much intended.

Though the competition might get tougher, the skills required to play the sport have become second nature. Soon, we can lay out for a 50-yard bomb and make the catch. We begin to anticipate the defense. We recognize formations.

It becomes a part of our life, and momentum builds.

Early retirement is no different, and it begins with a goal. The goal may be financial: “The second I become a millionaire, I’m retiring”. Or, it may be time-based instead: “I’m retiring in two years come hell or high water” (<– although we do have a “number”, this is more us).

Whatever the goal is, we begin work to achieve it. We practice. And, things become easier the more we practice. We begin to track our spending, set up automatic savings account transfers, max out our 401ks, etc. Basic retirement stuff.

The first time we say “No” to an expensive dinner invitation might be tough, but the second time it is less difficult. And the third feels even easier.

We get better at achieving our financial goals the more we try. The terrain becomes less rocky.

We achieve our goals early because…

Easy buttonStill no Easy Button, but it’s the next best thing.

We achieve our goals early because of our momentum gained through relentless practice. Momentum has propelled us further than we had anticipated. Remember that when our goals were created, we were not nearly as practiced as we are now. We sucked at this stuff, at least comparatively.

Our expectations for success were different. We did not have the skills that we now have. We had no idea that refusing bullshit social engagements could be so easy. And we may have also underestimated how powerful our investments worked for us.

It’s like estimating the duration of a hike, and all we’re looking at is the beginning of what seems like a difficult, uneven rocky trail that ascends for two miles. We give ourselves two full hours. But as we begin walking, the trail gets easier. Fewer rocks to climb up. Less of an incline. Until eventually, the trail becomes dead flat with nothing standing in our way. We make it in an hour and 15 minutes instead of two hours.

Thanks to our goals, the skills that we acquired snowballed into something wonderful. We are better at early retirement than we were before. With each financial accomplishment, the snowball builds. And the bigger that the snowball gets, the easier it is to accomplish our next goal.

Until eventually, our snowball becomes damn near unstoppable.

We track our net worth using Personal Capital


51 responses to “Snowball of Early Retirement”

  1. Very true and great motivational topic. Once you get decently on the turn around path it starts to build on itself. Money begets money via interest, so your investments begin to return more a year then your paycheck. Your lifestyle level becomes ingrained so you stop wanting for the next big thing. The behaviors just become you.

    • Steve says:

      “The behaviors just become you” – very well stated, and completely true. The more we do them, the easier they are to do, and we begin automatically making the best financial decisions for us. It’s a wonderful feeling!

  2. Absolutely true! And once that snowball get so powerful and big that it is bringing so much investment income that it is basically a third salary for the household…that’s when the magic happens!

    • Steve says:

      Ah, I like where your mind is at! It’s true, it’s like a salary, but with far, far less stress to go along with it. 😉

    • Exactly! And this is the single point that I can’t quite get Mrs. Vigilante to fully grasp my excitement over. I tell her: “In a few couple of years at this pace, we will have enough money saved that our average expected returns would be greater than what we are able to contribute. Isn’t that INSANE?!” She doesn’t seem to think so. I think that’s a huge turning point, where financial independence becomes as close to a sure thing as you can find outside of death, taxes, and political ads in October.

  3. Apathy Ends says:

    It is shocking how many of the habits that took awhile to burn in have become second nature to us over the last few years.

    Start now and don’t quit!

    Great post!

    • Steve says:

      I agree, this is one of the amazing parts about financial independence and early retirement. Habits become ingrained that we don’t even think about them any longer. They become automatic. Almost like auto-pilot run by our financially-trained subconscious minds. 🙂

  4. Chad Carson says:

    Love the football analogies, Steve. Are you holding out telling us about your secret football stardom? Is that the next career after early retirement? Pull up to the practice fields in your airstream?

    I definitely agree about momentum and snowballs. Although it was a bear to get through, I loved reading Warren Buffet’s biography The Snowball because it was apparent not only how his money snowballed but also his skills, his intelligence, his ability to communicate, and the strength of this relationships.

    This is a long quote, but I think it’s appropriate for the power of snowballing your early retirement efforts:
    “Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favour all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamt would have come his way. I have learned a deep respect for one of Goethe’s couplets:
    Whatever you can do, or dream you can, begin it.
    Boldness has genius, power, and magic in it!”

    • Arrgo says:

      I really like this:

      Whatever you can do, or dream you can, begin it.
      Boldness has genius, power, and magic in it!”

    • Steve says:

      Ha! I wish! Football happens to be my favorite sport. 🙂

      I haven’t read Buffet’s biography, but it seems to be pretty much in-line with this post, albeit accidentally. Perhaps the snowball is even more powerful than I had thought!

  5. Arrgo says:

    I’m a big believer in momentum and it is a powerful tool in achieving any goal. When I was taking IT certification exams, once I worked hard and passed it, that gave me more confidence and motivation to start on the next one. Its hard to admit sometimes, but in many cases its the mental blocks that hold you back. In my experience, about 90% of things I wanted to do werent half as bad I made them up to be. You just have to push yourself, come up with a plan, and get started. Sometimes I’ll just break them up into smaller achievable tasks. Each completed task is a building block. You just need to have some patience and before you know it you’re there. This could be saving for retirement, cutting back on your expenses, working towards a degree, or cleaning out your garage.

    • Steve says:

      Totally, Arrgo – life is very much a mind game. Once we get passed the mental barriers that we put up for ourselves, things suddenly become much easier to deal with. And I agree, most of the things that I believed to be “difficult” weren’t all that tough after all. The more accomplishments that we have under our belts, the easier it is to address the next challenge. 🙂

  6. Repetition makes us better for sure. You’re not going to be able to lift more if you only go once a week. To see progression you need a plan, and you need to hit the gym multiple times per week. Same thing with FIRE.

  7. TJ says:

    Momentum is huge when you work towards a financial goal.

    Unfortunately, reverse momentum can be a huge factor too and that’s why you see people in poor situations only end up worse.

    Kudos to you guy for adopting the mindset where you are going to retire at a certain time regardless of the money. The “one more year” syndrome is real, but it sounds like you’ve mostly avoided it.

    • Steve says:

      Thanks TJ. Yeah, we’ve never considered working another year. We’d easily have over a million if we did, but we don’t need a million to retire, and there will always be opportunities on the road to make some extra cash if we feel like working a bit. And in the end, we’d rather work a little bit while living the lifestyle that we enjoy than continue to be stuck in a situation that doesn’t really provide us with a lot of fulfillment.

  8. Great motivation today! The hardest part is to get the snowball rolling but once you get past the small gains in the beginning it can balloon very quickly! Will be interesting to see how my wealth compounds once I begin work!

    • Steve says:

      Thanks for your comment, Stefan. Yup, once the snowball starts rolling, you just gotta sit back and watch the show. Momentum is a powerful thing!

  9. Very inspirational!

    It’s definitely a different mindset that a lot of people have. I think the excitement to get to financial independence and freedom drives people even more as they realize that it’s actually possible… which leads to that snowball effect.

    I’m excited that you guys have made it and can’t wait to join you in that realm in the near future!

    — Jim

  10. Mrs Groovy says:

    Thanks for writing about this. It’s a cool concept. Most of us know about the debt snowball but the early retirement snowball can be even more empowering. We hit our $$$ target at least a year earlier than anticipated due to building up those good habits. As Green Swan said, watching your investments put forth another salary is a huge benefit of building momentum. If only we could convince folks who haven’t started investing that the day will come where they see their money making money.

    • Steve says:

      I’ve found that some people just don’t want to be helped. It’s easier to feel sorry for one’s self, I suppose, than face reality and make some changes in life. It all begins from within. 🙂

  11. Mrs SSC says:

    We totally agree with this snowball analogy. We have found this in our “early retirement” journey also. After I quit my job to chase my dream job for a HUGE pay cut, we thought that would derail us. But after a few months of running numbers on the drastically cut income, we are still right on track! The only difference is that now we both love our jobs, and we might stick it out an extra year or so just because we are quite happy. Actually, if we lived in a more ideal town with a better climate, we might be tempted to work for like 10 more years!!!

    • Steve says:

      Loving your jobs definitely makes a huge difference, and not a lot of people can honestly say that they do (I certainly can’t!). But, having the option to work another year in a job that you actually enjoy might not be too bad of a scenario. 🙂

  12. Great Post Steve…and so true! But I have a bad habit of underestimating the time everything takes! 😉

    So let me ask you a question: Let’s say stock market valuations dropped 50% tomorrow (or next week), would you still reach your goal early?

    I think most folks on the path would say “nope, I’ll be working awhile longer”.

    My point is, we’ve had awesome returns the last few years. It’s great to be positive, but that might not continue.

    • Steve says:

      Thanks Mr. Tako. No question about it, the market definitely helped. If the market dropped 50% tomorrow and we lose half our investments, then no, we certainly wouldn’t be ahead of our goal. That’s not to say that we wouldn’t still retire, but we’d do so under much, much different circumstances.

  13. That’s very true. 🙂 We’re still in the getting-out-of-debt phase of our FIRE dreams, but it really does snowball in unexpected ways! For us, it’s almost become addictive. I guess you could say that saving money is one of our favorite hobbies. 🙂

    • Steve says:

      It is addictive, isn’t it? Watching your money grow and work for you is definitely something that I’ve gotten used to, as I’m sure many of us have. 🙂

  14. “Whatever the goal is, we begin work to achieve it. We practice. And, things become easier the more we practice.” – LOVE IT!

    Putting in some hard work (and perhaps some uncomfortable situations) short term can have huge long term payoffs… if only more people would take a better look at their priorities and adjust appropriately.

    • Steve says:

      Thanks Brad. At this point I’m not sure that many of us know what our priorities are, unfortunately. We think we know. But it shouldn’t take a drastically life-altering event to suddenly knock us out of our spending fantasy and into reality.

  15. Carl Pascale says:

    I definitely saw the ‘snowball’ effect when I realized that the retirement money that we had accumulated was producing more in returns than the amount we were adding. It’s a great feeling to see the result of adopting good financial habits pay off.

    • Steve says:

      I couldn’t agree more, Carl. It is great to see, and shows that investing *generally* works. There are ups and downs, of course, but over the long term. it works.

  16. Mr. SSC says:

    Another thing that happened to us after Mrs. SSC’s big paycut was receiving no paycheck for 3 months. We thought it would be pretty tight, but doable and in the end, we were still able to save ~$3k/month and didn’t feel pinched or tight about anything. It was like, “Whoa, we really do live off of less than one paycheck!” hahahaha

    It’s just become the new lifestyle, so it didn’t seem uncomfortable or anything like that at all.

    Like Mrs. SSC pointed out, I’m still amazed that even with her big paycut we’re still on track for 2018. Surprising where you can find money to invest when you’re mindful about it and not just spending willy nilly.

    • Steve says:

      Awesome story – losing a whole paycheck but still saving WAY more money than the majority of Americans is a great thing to be able to say. It goes to show you that saving doesn’t have to be tough. It does take discipline, though! 🙂

  17. Great post. The Appalachian Trail comes to mind. I had a friend hike it, and he said the first 200 miles (10%) were the hardest. Snowball!!

  18. This post reminds me a lot about a book called “The Compound Effect.” Essentially, the author of that book talks about how little actions we do compound into big effects later on. An extra step here, an extra dollar saved here, a little healthier eating, and over the long run, you’ll see huge differences in outcomes.

    The same thing is true here. A little big of saving there, a little bit of foregoing something now here, and over time, those effects add up big. You don’t even notice it!

    • Steve says:

      Sounds like a good read, Financial Panther. It’s true that the decisions that we make today can and do have profound effects later on. They don’t have to be BIG changes, either. The small things, when taken as a whole, can add up to amazingly powerful sums!

  19. Stockbeard says:

    Resonates with me. I actually feel uncomfortable now when people suggest we go out for lunch or diner (not that it’s always a good thing, mind you). No later than today, a colleague wanted to go out for lunch. I planned ahead, told him I had already packed my own lunch (true), and suggested we met at a place where he could buy some takeout so we eat together in some public area. Worked great, saved me $10, and we both enjoyed our lunches and each other’s company.
    I wouldn’t even have thought of that 2 years ago, I would probably have thrown away my own lunch or something…

    • Steve says:

      Truthfully, I probably would have jumped at the chance to go out as well a couple years ago. But then again, I LOVE going out to eat, even if it’s just for a $10 lunch. That’s been the toughest thing for me to change over the years. Good on you for having the discipline not to give in, but to meet your colleague half way. 🙂

  20. Thanks for the big shout-out, buddy! I do think market gains are helping us be ahead of the game. But the snowball is real! We’re now projecting ending up at a place where we’d still be fine with a 40% market drop. Not that we want that drop, of course, but we could ride it out. Feels pretty awesome to know that! Look forward to all of us crossing the finish line in short order!

    • Steve says:

      You’re welcome, ONL! I’m looking forward to crossing that finish line as well. Just a couple more months, now. Then, the real fun begins! … or so we hope. 🙂

  21. Just had to pop by and say it’s thanks to people like you and blogs like this that I can get momentum going in my own life! Definitely helps when others are there to nudge you along 🙂

    • Steve says:

      Thanks Penny! That’s awesome to hear, and I’m very glad that my words resonate with you. That definitely keeps me coming back to write more. 🙂

  22. YAY! Mrs. ONL is CONSTANTLY telling me this will kick in for us. I’m believing all y’all because I’ve seen your stories and I’m really counting on the snowball!

    • Steve says:

      Hehe! I know it will, Maggie. It might already be, in fact. I’m sure some things are easier for you now than they used to be…things that you probably thought were tough when you first started your drive to FIRE. Maybe? 🙂

  23. […] Snowball of Early Retirement – Think Save Retire […]

  24. Mrs. BITA says:

    Well written post, and so true! As someone who spent a long, long time ignoring my money, now that I’ve started watching it, I find it fascinating. Watching money beget money, seemingly out of thin air, reeks of magic to me. Like an open mouthed child watching a magician, a hat and a rabbit, I want to see the trick over and over again. This makes me want to put more money away, to watch the trick become bigger and better and more unbelievable. And the more I put away, the easier it becomes to put away instead of spend.

    • Steve says:

      “…I want to see the trick over and over again.” Ha! Cleverly worded, and I absolutely agree. It’s a trick that I never get tired of watching. 🙂

  25. Some of us are achieving the goals early, and the numbers are huge who have reached their goals just at the right time. Things get even more interesting as we more practice and perfect at what we do.

    Snowball becomes even more functional when a person has achieved their goals and dreams, but that just doesn’t stop them from dreaming a new target. Nevertheless, we all tend to take that hype and set an aim for the next step.

    It’s true that many of us seek to retire early as a millionaire, but experts (Those who are a millionaire) said that they are moving forward to make it even more massive, so there is no stopping even after the retirement.

    • Steve says:

      There is no stopping after retirement…I like that! Retirement should just be another phase in our life, not some stopping point for being productive. The younger we are when we retire, the easier that will be to achieve. 🙂

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