In 2013, "Mr. and Mrs. 1500" — the pseudonym of soon-to-be early retirees Carl and Mindy — decided to get serious about their savings goals.
"I was having this horrific day at work," 42-year-old computer programmer Carl told Farnoosh Torabi on an episode of her podcast. "I was 38 at the time, and I'm like, 'There's no way I can do this until I'm 62 or 65 or whatever age people normally retire at."
Inspired by the idea of retiring early, the husband-wife duo with two kids vowed to build a portfolio of $1 million and no debt by February 2017. This would allow them to retire in 1,500 days at the ripe age of 43.
They achieved the $1 million mark ahead of schedule — in April 2016 — and now aim to reach $1.12 million by February, at which point they'll officially retire.
The good news is, anyone can do the same — and you don't have to be an investment banker raking in millions. All it takes is "smart decisions along with intelligent saving and investing," they write on their blog.
Here's a look at exactly how Carl and Mindy are making early retirement a reality:
The couple started by analyzing their spending habits. "My wife and I wrote all of our expenses in a book," Carl explains on their blog. "Every time we returned from shopping or paid a bill, we logged it."
Based on their logs, they determined they could live on $24,000 a year. To be safe, they added a $6,000 cushion and bumped that estimate up to $30,000 a year.
Using the "4 percent rule" — the slightly controversial rule of thumb used to help you determine the amount you can withdraw from your retirement savings each year without running out — they came up with their magic number.
"Based on the 4% rule, I need about $800,000 to retire with no debt," Carl wrote on the blog in 2013. "However, I'd like very much to be able to help my children through college, so I'm going to bump the number up to $1,000,000."
They committed to putting $2,000 a month toward their investments, which stood at $570,000 when they started, in order to build their portfolio up to $1 million in 1,500 days.
To be sure, they had a big head start. They'd spent years building their up their portfolio by maxing out his 401(k) account, flipping houses, and saving a good amount of their income. Carl noted that his programming job paid well, but did not share specifics.
You can read more about their initial financial standing and calculations on their blog.
Once they settled on contributing at least $2,000 a month, the couple immediately looked for ways to cut their costs. It's a good starting point for anyone, they told Torabi. It's "something you can do immediately."
They also recommend recording each and every expense, which will allow you to see exactly how much money you're spending and where there's room to save.
"You'll be surprised," they say. "We started doing this and were like, 'Wow, we spent that much on groceries? What were we thinking?' After you do that, evaluate every one of those line items and see how you can cut those down."
Shortly after making the decision to retire early, the couple sold their 5,000-square-foot lake house in Wisconsin and bought a 1,400-square-foot fixer upper in Colorado. It meant a significantly smaller mortgage. Plus, "those extra 3,500-square-feet added absolutely nothing to my happiness," Carl adds.
They also note that their location in Colorado is a big part of the reason they're able to retire in their 40s with a million-dollar portfolio: "If you lived in San Francisco or Manhattan, I don't think you'd be able to do it, but we live in a very low-cost area in Colorado. … Life is pretty cheap here, and we can get by on about $2,000 a month."
Next, the couple focused on earning more. Carl's main side gig is blogging, but he also fixes up homes and writes smart phone apps. Mindy, who was previously a stay-at-home mom, landed her current job as a writer for a real estate investing website through their blog. They both plan to continue working on the side in retirement.
They also made smart investments, including buying the $176,000 fixer upper home that they estimate is now worth over $400,000. Another major investment vehicle for Carl and Mindy is the stock market. Although they don't recommend picking individual stocks — which is much riskier than investing in low-cost index funds — they did have success buying shares of Facebook (NASDAQ: FB).
"I don't endorse it and it's not my new methodology, but I bought 2,000 shares at Facebook at about $30 a share and now it's like $120 a share," Carl told Torabi. "I'm an index-fund guy now."
Whether you choose to invest in real estate or the stock market, or neither, the point is that focusing on increasing earnings is just as important as saving. Increasing income isn't always as easy as cutting costs, but most people don't work more than 40 hours a week, they said on Torabi's podcast. They said you can drive for Uber or Lyft and rent out a spare room through Airbnb to increase your income.
"I learned that you don't need a lot of money," Mindy told Torabi. "My quality of life has not changed since we became laser-focused on cutting out our expenses. I don't need the cable TV. ... I don't need a super-expensive phone plan."
"I don't miss all this stuff because it didn't really add to my life," she said.
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