I see your flashy car, your sparkling ring, and that giant starter castle. I know what all of those status symbols cost, and I’m still not impressed.
It’s not that I don’t appreciate the finer things in life. I actually do. I’ve just never been huge on flaunting wealth or financing expensive stuff. Because, let’s face it; the bulk of people we know don’t actually own their giant house or their $50,000 car – they’ve merely signed up to make payments on them for decades or more!
Why Pursuing Status Symbols is Pointless
The truth is, the vast majority of status symbols are supposed to make you look like you have money, right? It’s the human version of a peacock strutting it’s feathers. All this junk is supposed to make you look rich and, ultimately, more attractive to others.
In my opinion, it’s all bunk. It’s not real. It’s crap. But you’d never know that by watching the Kardashians, reading Cosmopolitan, or driving down the street.
We are bombarded with a constant stream of marketing and ads. Everywhere we turn, we’re told how this product or that item is the key to looking hip, sexy, or rich. Heck, even the clothes we wear are billboards for a products. Marketers are geniuses at turning their products into status symbols, and it’s all designed to make you do one thing – spend more money.
So, while some people prefer to look rich, I’d prefer to actually become rich. I’ll take money in the bank over a Gucci watch or a new speed boat any day. No, my used Prius doesn’t look flashy and my clothes definitely don’t scream “cool.” But while others will be working until they die to pay off their “precious” toys, I’ll be enjoying the ultimate status symbol – early retirement.
How We’re Preparing for Early Retirement
Anybody can use easy credit to buy stuff that makes them look rich. Just bust out your credit card, run up the charges, and you could be the proud owner of a Birkin bag of your own. But with early retirement, there’s nowhere to hide.
Like it or not, you can’t take out a loan to fund your early retirement dreams. There’s no credit card that provides 50 year’s worth of income so you never have to work again. The only way to get there is by building your net worth now. That’s what we’re doing, and we’re even getting to travel the world along the way. Here’s how:
Conscious Money Management
Conscious money management is the first step to creating a strong financial foundation. Even if your goal isn’t to retire early, managing your money thoughtfully is a great way to fund the things you really want. Conscious money management includes steps like starting a budget, tracking your spending, and reducing your expenses. These tools opened our eyes to how much money we were actually wasting each month, and they honestly changed our lives forever. By managing our money consciously, we’ve become debt-free (besides the mortgage). Now, instead of spending thousands a month on car payments and evenings out, we’ve got more money for things we actually want – like early retirement, college savings, and travel.
To make the most of the money you have, you can’t just focus on what’s in front of you. You have to plan ahead, which includes saving for your future. Paying yourself first is a great way to accomplish this. Directly depositing money from your paycheck into a retirement account helps you save that money before you can actually spend it. (This site has a free retirement calculator that can help you check if you’re saving enough.) Once you’re saving a sufficient amount for retirement, start planning ahead in other areas of your life by starting a travel fund or college savings account.
Building Multiple Streams of Income
Here’s one important piece of the early retirement puzzle that people miss. A typical American family relies on one or two paychecks to fund their entire life. But what happens if that income stream dries up? To get ahead, you need to build multiple streams of income. In fact, it’s said the average millionaire has 7 different income streams! So, instead of pouring money into items that lose value, invest your money in assets that make money instead. For us, that has meant investing in rental properties. These houses provide additional income streams that are passive, plus they are theoretically growing in value. Therefore, we should make money while we own them AND when we sell. That doesn’t mean you should go and buy rentals, but you should look for ways to diversify your income.
After working hard to build your assets, the last thing you want is to lose them. That’s why it’s important to make sure you’re protected. This starts by building an emergency fund. Start by setting aside at least $1,000 to handle emergency costs that might arise. Eventually, you’ll want to save at least 3 to 6 month’s worth of expenses to help you navigate even the biggest of problems – like losing a job. (We actually keep about a year’s worth in our eFund.) You should also ensure you are properly covered by insurance. This includes getting a good term life insurance policy, making sure you’ve got healthcare coverage, and considering other insurance products that protect your assets and income.
I know early retirement isn’t for everybody. I also know it’s not as sexy or flashy as shelling out cash for that pool in your backyard. But, I honestly think retiring early is the biggest – and BEST – status symbol of all.
So yeah, I’ll admire your bright red convertible as you cruise by. And I’m more than happy to come over to relax in your new, eight-person hot tub. But, while I appreciate the look of your shiny diamond ring, you can keep them for yourself.
While you spend the best years of your life working to pay them off, I’ll be wearing worn-out clothes, driving my used car, and counting down the days until I never work again.
Are you planning to retire early? Why or why not?