One key number that determines when you will retire

One of the fastest ways to retire early is to reduce your spending and thereby increase your savings rate – because of the progressive tax system, it’s a lot easier to save a dollar than earning one post-tax. 

You don’t have to be a crazy cheap fuck who never wants to pay for anything or do anything that costs money to have a good savings rate.  Whats the fucking point of living if you have forego the joys that little things in life give you, truth of the matter is no matter what the news tells you, skipping that avocado toast every morning isn’t going to help you retire early. 

What you do need to do is have a clear picture of exactly where your money is going and cut down wherever you can without reducing your quality of life. This can be as simple as buying 2nd hand console games on Ebay instead of brand new.

I used to be fucking shit at saving my income even though I worked as a consultant for many years meaning my accommodation, travel and food were taken care of.

My problem was I used to get caught up in spending my money on going to bars and buying  crap I did not need just because everyone was doing it! For example, I have this fucking oculus VR set that I have used exactly bloody twice and cost over £400 when I bought it. 

I’ll to tell you how I got my savings rate to 77% of my income. 

Lower your housing cost

The biggest cost these days for people is housing, whether it’s renting or a mortgage, on average people spend around 30% of their post tax income on housing. That is a major area that people can save really massive amounts. Here’s how you can do that:

If you’re renting

• Get a housemate – Having a house mate can fucking suck, but it can take off years from your retirement journey. A one bed flat has 80% of the cost of a two bed-flat on average, so you can save a ton of money if you move in with a friend or partner into a two bed place rather than living in a one bed flat.  
• Store things for people – People pay up to $50/£50 a month for storing their stuff, if you have room in your attic/basement. 
• Downsize  – It would fucking suck initially to move into a smaller place but, aside from a lower rent, lower property or council tax, a smaller property also has lower heating/cooling and electricity bills.

If you own a place

• Get a housemate – Be a live-in landlord, I am one. I have a two bed flat, one of the bedrooms is a lot larger and has an en-suite bathroom, this is the one I rent out, and the rent I get from it covers almost my whole mortgage. 
• Rent a spare room on Airbnb – Before the pandemic, I absolutely loved this. I’d rent the larger bedroom of my 2-bed flat on airbnb and even at 50% occupancy, it covered my whole mortgage and all bills each month! All without the hassle of a a full-time housemate.
• Downsize – Selling your place for a smaller one can bring you years closer to retirement and give you a pretty solid fuck you fund! Aside from a lower mortgage, lower property and council tax, a smaller property also has lower heating/cooling and electricity bills.

Lower your transport costs

This is normally the second largest cost for working professionals, and it seems hard to be able to save money on this, but there’s definitely a few ways: 

• Use public transport – Yeah I hate waiting for the fucking train too, but in general, public transport is around 20-40% cheaper than owning a car and it’s related costs, while it may not always be as convenient, it will definitely save you money.
• Cycle to work – I know, cycling sucks a lot of the fucking time, but it’s free and good for your health, not to mention a lot of employers offer bike 2 work schemes that offer interest free loans to buy a cycle.
• Downsize you car – Never buy a car brand new – EVER. But even whatever car you have, chances are if you’re in your 20s or 30’s you’ve splashed on a car that suits your self-image – fuck that. Downsize it and put it into your FUCK YOU fund, you will appreciate having a fuck you fund a lot more than a flashy car. 

Consolidate your debt

One of the worst things in life is compound interest working against you. It’s fucking brutal.  This is one of main reasons a lot of people have a hard time trying to increase savings.

Consolidate your debt – this is the perfect time. If you have student loans or credit card debt, get them refinanced and you are bound to get a lower interest rate since these are historically low rates.

• Refinance your loans –  The cost of borrowing money has never been cheaper, refinance your student loans or any credit cards you have and you will more than likely end up with a better rate than you currently have which will end up saving you a fuck load in the long term. 
• Remortgage your property – Mortgage rates are at an all time low, and because these are secured loans you will be able to borrow money against any property you have a hell of a lot cheaper than a credit card. So use this money to pay off your high interest debt now! 

Sell your old stuff

If you’re like me you have a lot of stuff lying around from years gone by that you thought was too good to throw away but you don’t really use anymore.

Stuff like old laptops, tablets, graphics cards from old computers can go for hundreds of dollars. Sell these on Ebay/Facebook marketplace or the like and free up some well needed cash.

Look around, make a list and find out how much these things are going for, then start listing – you’ll be surprised how much stuff like old consoles with games or graphics cards can go for – especially with tech shortages going on worldwide and a record number of people spending time at home. 

So these are 4 things you can do now to increase your savings rate.  Combine these with the 3 ways to ensure your money is working for you and you’ll be well on your way.