Reflections on 1 year of Early Retirement Extreme

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Reflections on 1 year of Early Retirement Extreme

Post by Matt3121 »


it's officially been a year for me since I found out about ERE. As noted in some of my other posts, because of health reasons, I did an immediate 180 degree turn and reduced my expenses dramatically from 5k+ a month to about 750/mo. I also was able to completely retire in December because of the changes I've made. I figured I'd share some of what I learned. I'm sure I'm going to rehash some of the things I've written in other posts so feel free to skip that if you are bored. I'm just kind of explaining how my views towards ERE and money have evolved.

I should warn you this is rather long, I’ve highlighted the subjects in bold though. I’ve found it very cathartic to write this though because so much has changed for me over the last year and I’ve made such dramatic changes. I cannot overstate how much of a positive impact ERE had.

First of all the thing that really appealed to me, other than not having to work, was the extremeness of it. Jacob doesn't make any bones about it. His way is to live extremely frugal. And after reading his blog (I think I read literally every post straight through) I was just dumbstruck by how crazy it was. It seemed so impossible at the time.

I knew I couldn't approach Jacob's level but I figured I could at least cut back. After achieving that and getting down to about $1,500 a month back in December I was able to quit permanently. This was very helpful because my health was so bad, but by not working
I could work a lot more on my diet, and interestingly enough it did start to have an impact. Through trial and error I was able to find what worked and what didn't work. Now I'm actually doing half decent (Eating brown rice, no salt seemed to make a big impact. I have
no idea why).

My whole life I've had what I call a 'depression era mentality'. I grew up pretty poor for the US, so at times I was lacking food, we always worried about paying rent, etc. Not horrible though, I wasn't at risk of dying, but compared to most americans I talk to they can't relate. It left me always worried about money. Even though I made a ton I was afraid to spend it, because who knows, and sure enough I got sick, so it made sense to be concerned. Also, like most poor people I didn't understand how to manage money well. I rarely bought things but I spent too much money on things I thought were required (nice apartment, too much on food, etc).

What's interesting is that ERE changed my view towards money... twice (second one I’ll get to later). The first one was to realize that money is precious. Not that I'd put it over another human, but it matters, and you probably shouldn't blow it in frivolous things. By viewing it that way and starting to reduce it got me very excited. Just that first month cutting my expenses on food from $1,000 to $300 was the greatest feeling, "Wow, I have another 700 dollars to save or spend on something else". It was like I immediately got a pay increase of $700 a month, for doing nothing. That was great, and I didn't give up all that much to get it. I had a few other victories in savings in the next month or two, which probably brought my savings to $1,000 a month. Which was again, awesome. You really get a rush from saving. I think Jacob mentioned this before but the thought of saving is actually better than buying something, which I've found to be true for me.

After that my focus turned to reducing my two other big bills, transport and housing. Transport I knew would drop soon as my car was almost paid off but housing was the big one. I ended up focusing on buying a more rural property, which I did, which decreased my expenses by 2k a month when you factor in a roommate I got.

All told from June to December I cut expenses from 5k to about $1.5k, which was a reduction I was extremely happy with. From then on, I had a lot more free time, so I started thinking about reducing my other bills like Internet, Cell phone, etc. All these other reductions whittled me down to about $750 a month in expenses, in good months at least, sometimes a bit higher.

What this really gave me was freedom. And a huge sense of relief. I'm living way under what I need to. And that freedom of mind I can't even explain. You aren't worried about losing a job, or external stresses related to money. I've become a strange man in a strange land. I see people worried about money and it's hard to relate anymore. They are blowing money left and right on cars, houses that are too big, $2,000 couches, etc. I'm in my little house, pretty much insulated from the worries of the world. Don't get me wrong, it doesn't make life perfect, bad things can still happen, but no matter what happens you are better off if your expenses are low.

Benefits of owning a house
. I have a half acre and a 700-800sqft house. I thought buying a house would be nice because I wouldn't have to worry about rental increases and headaches related to the apartment being inspected and all that. Boy, I can’t tell you how much better it really is. Even just from a stress perspective. I never realized how much of a pain it was to deal with that stuff. Every year, “Are they going to increase my rent again? How much will it go up? Is it worth the headache of moving down the street?

Those issues are gone. House is paid, only gotta worry about prop taxes, which do go up but it’s not by much, and I’m in the best position to handle it since my house is so small. There are so many other benefits I just had never considered. Before organizing my house was a pain, I couldn’t put holes in the walls, I was afraid to buy certain furniture because it’s hard to move. Now I can do whatever I want. I’ve bought some helpful furniture and I don’t have to worry about moving it because I’m not going anywhere.

There is a peace of mind that is just hard to convey. I didn’t even realize this was a stressor for me before, but it really was. Not only that, having a yard is incredible. I have 3 smallish trees (15 feet tall maybe) but they provide great shade. I love to go sit outside, watch the wind blow through the grass and the trees. Plus there are so many animals and birds to see. I have Cardinals, Bluejays (annoying lol), Crows, Starlings, humming birds, etc. It’s really relaxing to sit outside and look at that stuff. I also have a bunch of squirrels and a groundhog that is back there.

After seeing all this I realize that apartment living really sucks. Your neighbors make noise, there is a lot less nature to see, you can’t do what you want, you have the pressure of rent going up and always having to give them updated insurance paperwork, etc.

I’ll be honest, the first month I was in the place I almost cried (I’m a guy) every time I’d wake up and realize how small of a place I was living in, in the middle of nowhere (At least relative to before), was 15 mins from Philly in NJ before, Now about 45 mins away). I moved here in November when it was getting cold, it was dark and gloomy. It was just very depressing (I hate the winter and the cold).

So for the first month or two I was so unhappy, really almost every day. But it got a little easier when that second month came and I did the math. I had saved another $2,000 (plus 2k from the first month). I thought, “hmm okay, I hate this place but at least I saved a 2k this month, that makes it almost bearable”. Then the next month came. Another 2k. Then another 2k. “Hey this isn’t too bad!”

Now it’s been 9 months and I’ve saved $18,000. That’s incredible, no two ways around it. I’m SOOO happy with those savings. Every month I get this pretty huge reward, almost like a payment to me. I realize I could have done this, and basically spent 2k on ANYTHING I wanted. It just made so much sense.

Literally with the money I’m saving I could buy 3 or 4 more HOUSES in the area I live. Just from making a relatively simple change. If I did that I could probably net about 1500 a month in extra rental income. So I would save 2k, plus then turn that around to make $1500 a month. So about $3,500 a month swing if I cared to do that. Way more than enough to pay all my bills (not to mention the equity I would be building up in the house every month, over 3 houses that is another probably 500 a month).

Again when I thought of buying a house I didn’t realize it would have this kind of impact. I just knew I would save a bunch of money initially. So yeah, it’s just an absolutely incredibly powerful journey just simply on the house alone. By taking a smaller house, ironically, I could use that extra income I’d get from buying more houses and move into a bigger house if I wanted to.

This kinda gets to this idea of using ERE to reset. Get it paying your basic expenses, then anything you earn on top of that is gravy. I mention this later in the job section

A side benefit is that when Corona came I was able to avoid it much better than someone who is living in an apartment complex.

The only real negative is the super brutal winter in Jan and Feb, which I hate. BUT I found a great solution. I’m saving 24k a year on rent, so I’ll just spend 1k a month to go rent a small place in Florida or Arizona during the winter for Jan and Feb (AirBNB). That will allow me to avoid the worst of it and travel. Actually I’m considering building my own tow trailer/camper this fall and living in that at state parks and other places for 2 weeks at a time. In which case my costs will be substantially lower than 1k extra.

It's changed my view towards work. I’m a software developer (I know, that’s cheating for ERE), I got into it at a young age, but didn’t start getting good paying jobs using it till I was about 28, before that I bounced around a lot and failed at a lot of things (38 now).

I truly love to program, I started at 12 or 13 and it’s been a very fun hobby and job. But when I was starting to get sick it was the most severe drudgery. I was so tired and I just wanted to kill myself, it was like pushing a car up a hill. So, it was miserable for a while, however before that I really did enjoy it. The issue was that even though I loved my job and I was paid well, I hated that I had to work. I mean we all do, but there was always some level of pressure.

It was easy to find other jobs, but still, you’d have to worry about layoffs, or bad bosses or people you don’t want to work with. And to me a job was something you had to do to survive.

Post “retirement”, my view towards work really changed dramatically. After 2 or 3 months I reconnected with an old boss of mine and decided to go back to work doing some stuff I was interested in. This time my view towards work and money was totally different.

The first thing is that there is no pressure. None at all. If I want to leave I leave. If my boss is a pain I tell him I’m gonna quit, no big deal. Second, I’m very insulated from what happens at the company. If they are stressed or having a bad quarter, that doesn’t affect me in the slightest. That’s their problem. What’s the worst that can happen? I can lose my job and it will have virtually no effect. I’m still living way under my passive income.

So at this point jobs are just a way to buy extra stuff. If I want to buy a new piece of music equipment (I like to make music), or a new camera lens, well cool, that’s what the job is for, to buy extra stuff.

Now I view a job as literally just a way to upgrade my life. So for example, if I want to buy an RV, no big deal, I just work for 4 or 5 months and buy it. The job services my wants, not my needs, and that is a huge distinction.

And to a large extent it’s freed me from the “Depression era mentality”. I don’t worry that I’ll need the money because I’ll be broke someday. Now I can spend on this stuff freely and not be concerned.

That’s actually what I’ve been doing. Normally I’m extremely tight fisted with new purchases so my place was very minimalist and not that nice inside. Now I’m spending money to buy better storage stuff and things of that nature. It’s worked out great so far. It’s upgrading my enjoyment in life.

I’m still looking for freebies, I scored 2 amazing beach chairs and a huge beach umbrella in the trash at the beach! But now I feel pretty free to spend without concern. I’ve found that now that I can buy stuff without worry and I can enjoy it a lot more rather than a nagging feeling in the back of my mind.

It changed my view towards selling things and the value of things.
This happened pretty recently for me. Normally I’d buy stuff, and basically never get rid of it. I’d keep it till it lost all value even if I didn’t use it. I had a video camera i bought for $1,500 (Canon C100) that was just sitting in my basement and I figured it would just lose all value. Normally, that’s what I do, because I think “I can’t worry about that money, I’ll just earn more”, and the fact I’ve had a lot of bad selling experiences. With all the free time I have now though I put it on craigslist and sold it for $900. Which wasn’t bad at all. It was stress free and now I realize I can put that money into other things I might want more.

I know for most people this is extremely obvious, but for me I had never really considered it before. That really changed my view of the cost of things. Now I look at, “Okay this camera is $2,000 but I’ll be able to get $1,500 for it in a year so it’s really only costing me $40 a month to rent it essentially”.

So yeah, that has really changed things for me as well. A used Ferrari might be 70k, but if you keep for 2 years and sell at 55k, it only costs 15k over 2 years or about $625 per month (if you figure I’m saving 2k per month on my house I could technically buy 3 Ferraris for the cost of my old place, not counting maintenance and insurance, but still. I could either live in my old place or have a sweet ride).

It changed my view towards being broke. Now that I am totally ensconced in the ERE lifestyle, I have to say that I’m not worried about being broke anymore. My cost of living is so low (and I could get it lower), that I could lose all my money (as long as I had my house), Work at McDonalds full time at the lowest pay rate and in 5 months pay all my bills for the year. And that is pretty much the worst case scenario.


So that’s it, those are my reflections on one year of ERE, if you made it this far, I’m impressed, this thing was so long. But looking back I can really see how much ERE has changed my outlook on things, how much less stress I have now.

Even in the past 3 months I’ve enjoyed whittling away my smaller expenses. It becomes a fun game. Okay ramblings over. Just wanted to share in case anyone was interested :-)

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Re: Reflections on 1 year of Early Retirement Extreme

Post by sky »

Great update and good reminders on what is really important.

I agree about going south to warmer weather in winter.

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Re: Reflections on 1 year of Early Retirement Extreme

Post by Dream of Freedom »

Getting a house was a big improvement for me as well. I can do whatever I want and it even doubles as a hobby. Always something I can do.

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Re: Reflections on 1 year of Early Retirement Extreme

Post by Matt3121 »

Dream of Freedom wrote:
Thu Jul 23, 2020 12:09 pm
Getting a house was a big improvement for me as well. I can do whatever I want and it even doubles as a hobby. Always something I can do.
Yup! I love it.

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Re: Reflections on 1 year of Early Retirement Extreme

Post by UK-with-kids »

A good read and very inspiring, thanks for sharing.

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Re: Reflections on 1 year of Early Retirement Extreme

Post by ThriftyRob »

Inspirational story - thanks for sharing. I can relate to your conditioning/mindset around money, spending and accumulating stuff.

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Re: Reflections on 1 year of Early Retirement Extreme

Post by Matt3121 »

UK-with-kids wrote:
Thu Jul 23, 2020 12:42 pm
A good read and very inspiring, thanks for sharing.
ThriftyRob wrote:
Thu Jul 23, 2020 1:47 pm
Inspirational story - thanks for sharing. I can relate to your conditioning/mindset around money, spending and accumulating stuff.
Glad you guys enjoyed it.

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Re: Reflections on 1 year of Early Retirement Extreme

Post by Lemur »

Good read @Matt. Thanks for posting in my 'worried about being promoted' thread a few months back. I think one of your posts helped click things for me that helped me jump from 40% savings rate to 60-70% range even if it was a small detail. There was a post in there that I connected with the ERE book about using vision as a source of behavioral change.

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