We all hope to reach retirement while we’re as young as possible, but some hit the mark sooner than others.
As Grant Sabatier, author of “Financial Freedom: A Proven Path to All the Money You Will Ever Need,” stared at the walls of his cubicle in his corporate job right out of college, he became restless. He started crunching the numbers on how many hours of his life he was trading per amount of dollars earned after taxes. It came out to 4,700 hours of his life traded for $80,000 after taxes during a 2.5-year period. After landing back in his parents’ house with over $20,000 in credit card debt and no money in his bank account, he knew it was time for a radical change.
“I was disappointed in myself,” Sabatier recalls. He started thinking about money differently. “I’d been afraid of money…. And one of the things I realized was that money is a human invention, and you can control money or let it control you,” he says.
Sabatier took to YouTube video tutorials, where he learned how to run Google AdWords campaigns, and that landed him a job at a digital marketing agency making $50,000 a year. He added a side business, developing his own private client base of real estate brokers and lawyers.
Within a year, he set up his own full-fledged marketing business, with a specific agenda in mind. “I launched my own company with the explicit goal of saving $1 million as quickly as possible,” he says.
A drastic cutback in living expenses was crucial in moving toward his goal. He drove a used car that he bought for $800. “I moved from a $1,500-a-month apartment to an $800-a-month apartment,” he says. Sabatier’s then-girlfriend (now his wife) refused to come over to his cheap apartment, but he says it was worth it because the money he saved on rent and invested instead has now grown to over $300,000.
During this time Sabatier says he was saving and investing 80% of his income. He says that he had most of his money invested in the Vanguard Total Stock Market index fund. In around 2010 he also invested in five tech stocks, including Amazon, Apple and Facebook. He says that when he first bought Amazon stock, it was at $180. He says that when he first bought Amazon stock, it was at $180, and while that involved a bit of luck (it’s now over $1,500), he says an early retirement plan is reachable, even if you don’t find the next Amazon.
“Investing is one part of the picture,” he says. “You can control the variables of how you invest, but you can control more of the variables around how much you spend, and how much you make.” He says that index funds are the best place for the highest percentage of your money that will be invested over time, as the diversification factor gives a high return. “I often only recommend that you invest less than 10 percent of your own net worth in individual stocks,” he says.
Within five years, and before his 30th birthday, he had saved $1.25 million.
Sabatier, 34, says that with the achievement of his goal there came a few tradeoffs. “I think I was addicted to making money during this period,” he says. He says that working 80 to 90 hours per week definitely caused him to lose some friends. But he kept his eye on the prize: financial freedom. For him, that meant saving and investing enough money that working became optional and free time was maximized. “I figured out that every $100 I saved, I was buying myself six days of freedom in the future, and I started looking at money in units of time.” Nowadays, Sabatier hasn’t given up all sources of income, but he makes money on his own terms. He chooses to spend his time operating passion projects such as his website, MillennialMoney.com.
Sabatier admits that he is an extreme example of retiring early, having saved over $1 million within five years, but he thinks that most people can do it in 10 years if they make the necessary choices around cutting spending and increasing savings – and, of course, being lucky in selecting investments is key as well. For him, the tradeoffs are worth it. He suggests that retirement is really just choosing to live life on your own terms, “living the life that you want, not just the life that is expected of you.”
Do you have a retirement or savings story? Are you trying to make ends meet? Let us know at moneyquestions@yahoo.com.
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