Thrifty: The New Black – Retire first & then Get Rich

Early retirement is not for the weak!
Thrifty: The New Black – Retire first then earn your wealth

Many a Millenial (anyone born between 1980 and 2000) imagined as a teen that when he or she eventually entered the business workforce that they would kill it and be able to retire at 35 with a beach house and speedboat?

But instead you’re finding yourself struggling to tread financial waters and the simple dream of a bank balance that reflects zero would make you more than happy. Many have been caught reeling with confusion wondering What happened?

During the global financial boom of the ‘80s and ‘90s, the dream of the American middle class was nearly within our grasp, with populations rising steadily above the breadline for the first time since The Great Depression. In 2008, the financial markets, over extended by the economic backlash of the sky-rocketing middle classes, collapsed, causing the largest stock market crash since the ‘30s, turning all us boom babies, into recession babies. Suddenly we find ourselves grappling to manage student loans, car payments, and the ever-rising basic expenses of daily life while we move back in with our parents, because the job market dried up. We are no longer in a state where each generation does financially better than the last. The rise in global unemployment has gotten to a point where many governments are starting to use employment schemes to circumvent civil unrest.

Increasing inflation coupled with poor market stability has resulted in individuals having greater expenses than ever before, on what were previously basic staples, such as food, health insurance, paying a mortgage and owning a car. Suddenly we find ourselves a full income bracket lower than we thought we’d be. At the same time as the recession there was a boom in consumerist culture across the globe, people could suddenly see what they were missing and compare their state of living on an international scale. Being able to have everything you want has plunged many deep into the credit debt trap. Further, with people not earning well, many have the attitude that they might as well spend what little they earn on having fun now, because they don’t earn enough to save for the future anyway.

It all sounds so depressing. And it is. But the Millennials are accustomed to hard times and are making a comeback, adjusting and making their own sensible bottom-up economic solutions, making up for where the government has failed us.

Millennials are less trusting of the corporate world, beginning to reject the philosophies we inherited from our Baby Boomer, hippy parents and are cutting up their credit cards and moving further off the grid, away from lives of thoughtless decadence to explore the unchartered waters of civic sustainability and unmaterialistic contentment. Most people are now searching for a life of personal contentment rather than monetary wealth. This has been reflected in economic factions as decreasing relevance of using GDP to measure the worth of an economy. Western economics is glancing over its shoulder at the East and is being tempted by the policies of Confucius-based GNH polices. It has also resulted in two polarised types of mind-set: those who want the suburban, organic, vegetarian wholesome family life, and those who want to be single high rolling business execs, drinking soy chai lattes, with condos in Paris, Berlin and New York, who are married to their careers and have multiple lovers. These days it’s down to individuals who to work hard to carve out a financial refuge between these two end-members , we have learned the stinging truth that the People In Charge don’t give a frack about us and it’s time to take our own back.

Millenials are the first generation to have grown up with the internet, a world of knowledge at their fingertips. Inundated with images of terrorism, slaughtered calves, and post-apocalyptic wastelands filled with corn, we are a more reflective and pragmatic group. With a heightened awareness of the mistakes of previous generations, financially and environmentally, we put a lot of pressure on ourselves to correct these mistakes and do better. All the while making it look as if we aren’t even trying.

Mr Money Mustache is a thrift blogger from Colorado, who chose to retire first and then get rich. Tired of the fruitless rat race, he and his wife retired at 30 by optimising their saving and spending so that they could invest 75 % of their earnings and live off the dividends. A living example of how you can live well and be financially comfortable, without overworking yourself, I find this thrifty hick quite inspiring.

For those who want a page out of the millennial thrift book to help you tread that water, here are pointers I picked picked up from Mr Money Mustache:

1. Bite the bullet and learn a little about finance

You are never too old to start saving for retirement. Stop avoiding it. It’s super easy, a child could do it. Invest now and live off the dividends later.

2. You are not stuck where you live

Many people are held by the belief that they cannot move. You can. Consider where you live now, how much it costs to live there and to commute to work from there.  Would it be cheaper to move closer to work and cycle/walk instead of drive? Is living in the city too expensive? Consider moving out to the country.

3. The internet is your biggest frenemy

Thanks to internet and the Cloud, many paper-based industries are feeling the pinch, while digital ones are flourishing. People now have the opportunity to conduct business away from the office or at home. With online banking and online payment facilities, one no longer has to leave the office to queue for hours to pay bills. Groceries and packed lunches for the whole family can be ordered online and delivered to your door with a single click. BUT, where you no longer even have to use a pin to pay, and taking a snap with your smartphone buys you that expensive patent leather jacket (that you can’t really afford, but really need to out-dandy your friends), be on guard, here be dragons. Cookies and phishing software, FB, Twitter, marketing companies are raking social networking sites that will tailor ads and sites that will suck the money right out of your wallet. The internet is also a business friend and ally with many riding the crest of the tech-wave.

4. Trust me, you don't deserve it

Avoid getting swept up in social media-driven spending and sprees, claiming ‘you deserve it’.

5. Cut up your credit card

Take your credit card out of your wallet and hide it away for emergencies.

Avoid borrowing money at all costs. Don’t be fooled by banks or any other money lenders, who bombard us with loan opportunities, credit extensions and bigger bank limits. It’s a trap. Remember the 2008 recession? Well this is how it happened, loans and seemingly reasonable interest rates.

6. By a second hand car

Instead of indebting yourself for something new and shiny whose monthly payments will haunt you for years to come.

7. Save > 15 % of your monthly income

If you can get it to 50 % then we’re talking early retirement.

8. Don’t be a mindless consumer

Talking about money with your partner and family is not gauche or taboo, it’s sensible. I’m not saying you have to live like a miser, just prioritise and think forward. Decide on what your needs are and make a budget and stick to it. Long term planning is basically against human nature, you have to trick yourself into doing it.

9. Keep monthly spending to a minimum

Without becoming a miser. Balance is key.

10. Don’t go blank: Makreting jargon

It is the job of sales reps to sell, and make you feel guilty for not buying everything. They run over details at lightning speed on purpose, glossing over financial details while pushing the product into your blindly receiving hands. Remember as the customer, you are in charge, make them slow down and explain. It’s their job. Go into a big purchase prepared.

We live in age where a perverse form of opulent simplicity is in vogue. The internet has made the global market so much more accessible, anyone can buy anything, anytime, anywhere. We wear silk fair trade designer suits, Instagramming our organic artisanal meals from boho-chic gentrified solar powered warehouses, going glamping to outdoor contributionist music festivals where money is banned. Does anyone else think this is a little insane? Why must we live simply in irony, instead of for simply real?

Making the change to being an independently minded consumer is a lot more than buying free trade coffee it requires discipline, that you stop getting hung up when you compare yourself with others and believe that binge shopping is a form of therapy instead of a disease.

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