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How to Stay the Course to Financial Independence


How to stay the course to Financial IndependenceThe journey to financial independence can be a long one. Even if you save 50% of your income (pre-tax), it can take 15 to 20 years to finally achieve financial independence. This is a very long time to live frugally. And let’s face it; saving 50% of your income is living very frugally. Not many people can live on 50% of their income while their friends and family members spend whatever they earn. Living frugally means living in a smaller house, driving older cars, eating out less, and having fewer cutting edge tech gadgets than everyone around you. That’s a tall order for most of us.

Luckily, my wife and I are both naturally frugal, which gave us a huge advantage in our journey to financial independence. We never spent more than we made and we started investing in our early 20s. While we saved much less than 50% in our early 20s, we ramped up our saving rates as we earned promotions and made more money. When my work environment deteriorated, I made early retirement my goal and we ramped up our saving rates even more.

I didn’t keep good records back in my 20s so I’m not sure exactly how much we saved. I think we started with around 15% of our income and eventually ramped up to about 60% during my last few years as an engineer. Now, we save about 40% of our income every year. Our saving rate is very good right now because Mrs. RB40 is still working. She plans to retire before 2020 so we are saving as much as we can to prepare for her early retirement.

We have been living frugally for over 20 years and we should be able to continue to do so for the next 20 years. What’s our secret to staying the course on the journey to financial independence?

Being naturally frugal

Being naturally frugal is a huge factor for us and gave us a huge head start. Is there such a thing as being “naturally frugal”? Nobody is born frugal, right? It must have been the environment that we grew up in that made us more frugal than the average middle class family.

My family immigrated to the US when I was 12 years old and it took us a while to find our financial footing. My parents worked minimum wage jobs for a few years until they were able to start their own small business. We struggled financially for many years. We always had a place to live and plenty to eat, but not many luxuries. I lived in a frugal household when I was growing up and the habit stuck.

Mrs. RB40 can’t pinpoint exactly why she developed a frugal mindset. Her family was lower middle class (not poor) when she was young, and she was conscious of how much her parents worked to pay the bills. While she had a relatively comfortable childhood, watching her parents write checks each month and hearing constantly about what they could and couldn’t afford contributed to her unwillingness to spend money. She remembers very distinctly after being accepted to a university being told that she couldn’t go because the family couldn’t afford it.

I think many people (in general) haven’t had similar awareness around finances, so they never knew how important it is to save for the rainy days. I don’t know how true this assumption is. I’d love to hear from you about your childhood and how that correlates with your natural frugalness.

Anyway, the point is frugality doesn’t come naturally to most of us. Our kid has a very cushy childhood compared to our younger years. His childhood is a lot more comfortable than mine and he needs to learn life isn’t easy like this for everyone.

He has seen some poverty, but never had to deal with it. For example, our city has many homeless people. We can see some homeless camps and tents from our window. We also travel to countries with lower standards of living so Junior has seen that his life is comfortable. While this type of exposure is helpful, I don’t think it’s enough to learn about being frugal. Junior often thinks that if we don’t have something, we can simply go and buy it.

Avoid expensive neighborhoods

Traveling is a great way to see how other people live, but it’s important to understand frugality at home, too. It’s hard to be frugal when people around you aren’t. That’s why I avoid living in expensive neighborhoods. When I was an engineer, most of my coworkers lived a particular area of the city. I looked for a house nearby, but I never really liked the neighborhood.

The homes are bigger and more expensive; people who live there drive newer cars and live a more upscale lifestyle that the rest of the city, which made me feel like I would have to keep up.  There is a great benefit to living in the area — the schools are usually much better in expensive neighborhoods. However, we didn’t have a kid until our late 30s, so we didn’t care about schools back then. I prefer to live in a middle class neighborhood. People have less money and we don’t feel the need to compete with our neighbors.

These days, we live in a neighborhood near a university. I love it because there is a good mix of people. Our building has college students, young professionals, families, retirees, and a diverse population. Nobody is competing with anyone and it’s a great neighborhood. We could have purchased a condo in a more expensive building, but I like living in a low key place with normal neighbors who aren’t too rich. Luckily, our schools are really good too.

What is your goal?

Avoiding expensive neighborhoods is just one way to avoid lifestyle inflation. Most people make more money every year, but they are unable to save more. They spend more money on unnecessary stuff. I think this is due to the lack of long term goals. If your life is already comfortable, why change?

This isn’t a problem for someone who is already on the journey to financial independence. Usually, someone finds out about FI and they throw themselves into it because it sounds great. Well, that’s probably not true. I think only a small percentage of people really go for FI once they learn about it. Most people just go on with their lives. The problem is financial independence on its own isn’t motivation enough to live frugally for years.

To stay the course on this journey, you need to think about what comes after financial independence. Why do you want to take on this journey in the first place? You need to figure out your long term goals.

Our motivations

Here are my motivations for early retirement/financial independence.

  • Kid – I wanted to become a stay-at-home-dad. I wanted to spend more time with our kid and see him grow up. We didn’t like the daycare raising our kid.
  • Health – I wanted to get well, physically and mentally. My old job was making me sick. I was depressed and had variety of physical ailments. I couldn’t think straight because I hated working there. Life is much better now that I’ve been retired for over 4 years.
  • Self employment – Working for a corporation wasn’t a good fit for me and I wanted to try self employment. I started blogging in 2010 and quit my job in 2012. I didn’t get much sleep during those two years and Retire by 40 wasn’t very good. Retire by 40 is much higher quality now and I’m getting more sleep so it’s working out well. I love the autonomy of self employment.
  • Lifestyle – I needed a more relaxed lifestyle. I didn’t want to deal with traffic jams. I wanted to read more, watch some sci-fi shows, and to simply have more leisure time.
  • Travel – Once Mrs. RB40 retires, we’ll travel more. I plan to take a year off to travel around the world when Junior finishes 4th That way he can come back and start middle school after our trip. Once Junior goes off to college, I want to live in other parts of the world part time.

What are Mrs. RB40’s motivations?

  • Right now, she is doing too many things and finding it hard to focus.
  • RB40 wants to spend more time working on her arts and crafts and vegetable gardening.
  • She wants to do more public speaking and traveling for fun.
  • She wants to try starting a micro business.

Stay the course

Whew, I rambled a bit in this post, but I hope it’s helpful to someone who is on the path to financial independence. It’s a long journey and we need to be able to endure it. If you can live like a monk in the interim and enjoy it, then that’s great! However, most of us need to find a comfortable balance of expenditures and then minimize lifestyle inflation. Grow your income and funnel most of the growth toward investments. This will grow your passive income which will help increase your saving rates. Keep at it and you’ll get closer to financial independence every year. Stay motivated by keeping your long term goals in mind and don’t give up!

How do you stay the course on your journey to financial independence?

Looking for an easier way to manage all your investment accounts? Try using Personal Capital for free to keep track of your finances. Personal will aggregate all your accounts and give you a great overview of your savings and investments.

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 89 comments… add one }
  • FITrailHiker June 8, 2020, 5:07 pm

    I guess being on FI journey is like on diet. One really needs to enjoy what he eats during diet. Otherwise get frustrated soon . Same way one needs to enjoy saving and investing. It’s hard to force oneself to do something for 10 to 15 years if not enjoying.

  • David Chen October 20, 2016, 5:21 pm

    Thanks for sharing this! The journey to FI can be tough especially with so much unknown in the future, but keeping at it will surely be worth it in the end. Being able to accept that you don’t need to spend a full paycheck right away and can survive on part is a good first step.

  • CoupleofCents October 20, 2016, 12:14 pm

    I appreciate the more philosophical posts. Specifics are great, but I think people who really get into the concept of FI know what to do. It’s more a matter of having the mental endurance to invest for the long haul. When I first learned about FI I got really obsessed and excitedly told my wife about the idea and the ways we should cut our costs. It wasn’t until I explained what becoming financially independent would do for our life-style, that we would have more time together, that she came on board.

    • retirebyforty October 21, 2016, 8:59 am

      Right, there are a lot of info on FI now. Great job convincing your wife to come on board. That’s a tough step. 🙂 Good luck on your FI journey.

  • Stan October 19, 2016, 10:56 pm

    Joe, this is a good blog but I wish there are more specifics around the dollars saved, your expenses now, where the money is parked, what returns you are seeing, how you withdraw, etc. General advice is great but real life examples would be best. I apologize in advance if it’s somewhere and I didn’t see it. Thanks.

  • Dennis @ NestEggRx October 19, 2016, 7:33 pm

    Getting ahead financially begins with living on less than you make. It sounds so simple, but sadly very few Americans do it.

  • Xyz from Our Financial Path. October 19, 2016, 1:24 pm

    I grew up in a higher-middle class setting but my parents did cut on a lot of things. I needed to chose what I wanted and prioritize. This, of course, set me up for an easier frugal lifestyle. I now save over 50% our income and barely feel the hit. I guess you can get used to anything 🙂

    • retirebyforty October 20, 2016, 6:02 am

      50% is great! It sounds like your family did a great job teaching you about saving. I need to teach our kid that he can’t have everything in life.

  • Max October 19, 2016, 10:50 am

    Yeah, iUnno I don’t have a natural spendy outlook. If I’m really feeling fancy I’ll treat myself to a Philly Cheesesteak, pizza, hot dog, tacos, or burritos none of which typically is more than $10.

    I feel like as long as you keep your main expenses pretty low the extra luxuries really won’t break the bank. If you can keep your transportation, housing, and other larger fixed costs down then everything else is pretty gravy.

  • Our Next Life October 19, 2016, 8:15 am

    I agree wholeheartedly with all of this, Joe. I think especially about keeping housing costs low by avoiding expensive neighborhoods, and not listening to what the bank tells you you can “afford”… That has been our single biggest secret of success. We are not naturally frugal, but there was just something about paying so many hundreds of thousands of dollars for a house that made us want to run far, far away. And so, we’ve always underspent on housing, and that is by far the biggest reason that we are going to be able to retire next year. We are less than a year from paying off our house, but if we had listened to the banks’ calculator, we would still have to work for at least four or five more years. That is not something people tell you when you were going to buy a home – that it is going to hold you prisoner for so many years! 🙂

    • retirebyforty October 20, 2016, 6:08 am

      Right on! If we purchased what the bank tells us, we’d be in a huge hole and we wouldn’t have been able to buy a rental. It’s better to have some head room in your credit in case an opportunity comes up. Great job paying off your house early.

  • [email protected] October 19, 2016, 4:13 am

    What helps me to stay the course is having clear, easily pictured goals that I think about almost every day. Paying off the mortgage. Funding my kids college. Reaching financial independence. Letting my husband continue to be a stay at home dad (like you!). The other thing that helps when it feels like everything is so far away is breaking out my net worth spreadsheet. I have versions of the spreadsheet going back over 10 years. I calculate it several times each year, and watching the growth over time reminds me of just how far I’ve come over time. It helps confirm that I can eventually reach those goals.

    • retirebyforty October 20, 2016, 6:09 am

      I like updating our spreadsheet too. It’s very motivating to see the net worth accumulation over time.

  • Jeethu October 18, 2016, 11:44 pm

    Our family suffered a massive loss of income when I, the sole income earner, stopped getting wages from December 2001 onwards, the month in which we were blessed with our first born son.

    In 2003, 20 months later, the cash flow resumed and my wife also started earning from January 2004. In 2003, in my 34th year, I was initiated into worksheets and I immediately started using it to track our family finances. It helped us discover that we were spending close to 40% of our income. By then we were also introduced to Thomas A. Stanley’s concept of PAW and Kiyosakis’s 4 Box approach to basic accounting. As we did not want another financial tsunami to hit upon us, we religiously put those ideas into practice. In the next few years, we brought down our expenses to 30% and during the past ten years we have been able to restrict it to 25% of our pre-tax income.

    We were blessed with our second in 2006. We have been living in the same house built by our parents. Apart from a 2 wheeler bought in 2004 which cost us Rupees 37000 (900$ at the exchange rate in those days) we have never bought a car. We use our 12 year old 800CC small family car on rainy days and when 4 of us travel together. Otherwise, we the two wheeler serves for daily commute.

    In India we have no social safety nets or healthcare support as you have in the US. Quality education is available but the aspirants far outnumber the opportunities available. We have to fend for ourselves. Therefore, the case of frugality is stronger here. We pay for our medical and life insurance needs and save for the education of our children and take a two to three days family vacation every two years.

    We have scrupulously maintained our family accounts since 2003. We have been contributing 50% of our savings in government backed debt instruments and invest the other half in listed securities and private equity. Our business portfolio has been enjoying a 40% CAGR while our combined portfolio has been growing at 29% CAGR. The interest rate in India for long term debt instruments is 8% which is almost at par with the official rate of inflation, while by my own estimate it must be 13% or thereabouts.

    Today, our accumulated savings is 375 times our monthly expense. God willing, our plan is to build a corpus which at 8% interest yield would equal our annual salary. That is when we might think of a car.

    We benefit from your insights and observations. Please continue your good work.

    Good luck to both of you,


  • Your First Million October 18, 2016, 8:47 pm

    My wife and I are following this model almost exactly! We are saving about 40% of our after tax income. Although together our gross annual income is about $225k, we live in a 1,250 sq ft home with a mortgage payment of only $1,100 per month and both drive inexpensive cars. Our co-workers think we are nuts… if they only knew where we are headed. We invest our money into multifamily rental properties… and each year our passive income continues to grow. Working together as a team with common financial goals makes us unstoppable! Excellent post!

  • Moira October 18, 2016, 6:49 pm

    I love this post, Joe. I just left thirty-three years of employment to focus full time on being successfully self-employed. It’s my goal to be self-employed for the rest of my working life, even if that means finding creative ways to do it. I have had to invest in my business and it’s been hard to see the money in my business account fall ever lower with no income coming in yet. However, it’s my experience that usually one has to spend some money to make money. I’m self publishing a novel next year and it’s been vitally important to set up my author platform properly. So I’m frugal in the sense that I take advantage of every possible way to earn rewards on money I spend, and I’m eating more peanut butter these days, but I won’t skimp on the things that make my business a high-quality endeavor.

  • Mustard Seed Money October 18, 2016, 6:48 pm

    My wife is determined to live in a house with a yard in the country with a couple of chickens. She and I are scrimping to make this dream come true so we have laser focus. It hasn’t been easy but knowing that the dream is almost here is making the sacrifices well worth it.

    • retirebyforty October 18, 2016, 9:01 pm

      That’s great! I would like to try for a few years too. However, I’m not sure if we can handle it. We’ve been living in cities our whole lives. It will be a big adjustment for us. Good luck!

  • James October 18, 2016, 5:02 pm

    Common sense points, but I have to disagree with avoiding expensive neighborhoods. If someone is going to buy a house and they’re upper middle class in terms of financial income level, it’s much better to buy a modest house in a very expensive neighborhood rather than a great house in a modest neighborhood. One common thread among people is that rich people desire to stay rich and keep the poor people away, so the expensive neighborhoods are far more likely to experience a price appreciation.

    Also, find a rich significant other.

    • retirebyforty October 18, 2016, 8:59 pm

      I prefer 2 modest houses in a modest neighborhood. 🙂 That’s a much better way to grow your wealth.

  • saveinvestbecomefree October 18, 2016, 1:33 pm

    Great Post! It really is all in your mind. I’ve always been reasonably frugal, despite growing up comfortably middle class. My family was always conscious of the cost of things but we never had to make hard choices based on money. For me, I just enjoyed watching my financial position improve more than the things I could buy with money. So savings wasn’t a huge sacrifice. Giving my hard earned money to other people was the sacrifice! It’s strange how we all think about the same saving and spending in such different ways.

    • retirebyforty October 18, 2016, 8:58 pm

      I’m with you. I like seeing our net worth grow much more than say getting a new car. I think we’ll loosen up when we get older, but who knows..

  • Michael October 18, 2016, 7:55 am

    Great post, Joe! I grew up in a middle class family and we went through a lot of hardships growing up. You are right, frugality is something I had to learn the hard way. I am glad that I did learn to live within my means after my episode of maxing out my credit cards as a student.

    Knowing the why for your motivations is extremely important. Right now, I have a plan written down. However, I don’t have the why written down, it is in my head. You have motivated me to write it down. Thank you!

  • Mr. All Things Money October 18, 2016, 7:01 am

    So true about the neighborhood. We live in one of those Intel neighborhoods where most people drive a brand new car (expensive ones too). However, after the latest layoffs, I see so many houses going up for Rent . I am guessing these were the people who got impacted from the layoffs and can’t find buyers for these expensive houses; though I don’t know who would pay 2500 – 3500/mo for rent. They can’t sell their houses fast enough to move to another city for a comparable job as Intel is the only major engineering company around here.

    We have lived in our neighborhood for almost 11 years now and one thing I like about it is safety. There are hardly any break-ins or crime in our neighborhood. Hope it stays that way.

    If we were to live in a city which I would love to someday, we would likely do the same as you and rent or own an apartment.

    • retirebyforty October 18, 2016, 8:56 pm

      They should sell while the market is good. Safety is important too. We live near PSU and there are more petty crimes here. I still feel pretty safe here.

  • Jo October 18, 2016, 6:28 am

    It takes a lot of time to reach FI so for sure one must enjoy the way to the target to keep the momentum. In my case I didn’t look for FI, only for FYM so I can jump from one job to the other for promotion and take the risk of being wrong about the new job.

  • Ines October 18, 2016, 6:21 am

    My 2 most relevant tricks to keep on track = Being frugal but not to the point where you suffer (if I can’t save 50% on a particular month I save 40%) + instead of thinking on money terms, think about working hours. When I want to buy something I think about how many days at work would that cost me.
    I also get naturally happy by saving money, more than by spending, which definitely helps. So planning how to save in small things comes naturally.

  • Jay October 18, 2016, 3:53 am

    Thanks for another great post. This topic of the long haul is something I often think about. I too am lucky to feel naturally frugal, likely due to my super thrifty parents. I also think you’re right they focusing on the motivating goals of financial independence can really help light a fire. Finally, I’m really trying my best to enjoy the journey. After all, if it’s going to take 15-20 years in the best case then I might as well try to have fun along the way!

  • OB @ Out of State Investor October 17, 2016, 10:17 pm

    Hi Joe!
    Great article here and it didn’t seem like rambling at all. My goals are similar to yours in that I’m striving for FI so I can spend time with my family and future kids. Though I see my wife becoming a stay at home mom before I can leave my engineering job. Second major goal is targeting a lifestyle where we can be location independent. We love visiting our extended families abroad, but to be FI would allow us to actually relocate for months or years at a time instead of just stopping by as a tourist.

    • retirebyforty October 18, 2016, 8:52 pm

      You’re well on your way to FI! Location independent sounds great too. We want to live in other countries for a while, but probably still stay in the US mainly because of our kid.

  • PatientWealthBuilder October 17, 2016, 6:47 pm

    it is hard for me to be frugal and we have a lot of people in the family so sometimes being frugal is just too much work. But I focus on the large expenditures, house, cars, clothes and try to keep those at a minimum. We could work on how much we spend for food.

  • Mr. Need2Save October 17, 2016, 5:50 pm

    I don’t think we are overly frugal, but we certainly don’t seem to consume as much as other people with an income similar to ours. Neither of our parents have been particularly good money managers, so I think that has led to our aversion to debt.

    I must admit that I do have some regrets on my last automobile purchase. Being an engineer (BTW – what’s going on with us engineers wanting to retire early?), I appreciate the engineering and technical capabilities, but I really don’t utilize those fancy features. I did pay cash, so at least one bright spot is that I didn’t take out any debt. If I could go back in time I definitely would have purchased something more reasonable. Live and learn!

    • retirebyforty October 18, 2016, 8:50 pm

      As long as you learn from your mistake, I wouldn’t worry about it. I’m the same way. I don’t need all the fancy features. I barely use the cruise control. 🙂
      Engineers need to plan for early retirement. Our shelf life is pretty short.

  • Sam @ Financial Samurai October 17, 2016, 10:33 am

    There’s a great big life after financial independence. I’ve found that it primarily revolves around helping people achieve the same thing because Joy comes from seeing Joy in others.


  • Dave October 17, 2016, 10:24 am

    I’m not sure whether one is born with frugality or acquired through experience but I have noticed many sibling pairs with similar upbringings who have a very different handle on money. Some people are savers, worriers, planners, etc., and others are not. Everybody has the ability learn to become more frugal but not everyone seeks out this knowledge.

    On the point of kids, my kids have it a lot better than I did financially, and I have it a lot better than my parents. I have to go out of my way to point out homeless people near home (there are are many but in the shadows) and we when we travel around the world. How do you explain to young kids that the cruise, the all you-can-eat buffet, the airplane ride, etc. are not the norm for most of the world or even the US? I try to normalize things by taking public transportation, going on inexpensive walking tours, staying at AirBnB and using Uber when we travel and explain why/how we are saving money.

    On the point of house, I disagree. My home has been my single best investment. I purchased a normal-sized home in the most affluent neighborhood I could afford. Using a 20% down payment, I have seen the biggest absolute return and very good % return among my friends. It’s hard to beat real estate returns in a desirable market like LA or SF or Seattle when using leverage. Most of my friends bought cheaper, bigger and newer homes in less desirable locations, but I am sitting on the largest gain. Plus I am closer to jobs, a major university, networking events, the beach, moderate climate, etc.,

    • Dave October 17, 2016, 10:36 am

      P.S. I’m fortunate to live in a “millionaire next door” neighborhood with a middle-class mindset. Most everyone’s a “millionaire” just by the value of their home. We have middle-class retirees who bought 50 years ago, we have middle-aged professionals who retired early through an exit package and we have working professionals who got here by working for a living. There are few luxury cars on my street and other trappings of wealth. Most people send their kids to the public school. These are all normal sized homes on a normal street.

      It’s good to maintain a middle class mindset but it’s also beneficial to associate with “affluent” people (or early retirees) if you want to become one. Let’s face it, most middle class people don’t have the mindset to retire early, the very premise of this blog.

    • retirebyforty October 18, 2016, 12:02 pm

      You’re right about eating out and traveling. We rarely eat out or travel when I was a kid. Now we have a lot more luxuries and that’s normal for our kid. It’s going to be tough to teach the frugal mindset to him.
      Good point about the house. Location is the key.

  • Fiscally Free October 17, 2016, 9:10 am

    I feel lucky to be naturally frugal. I definitely inherited it from my parents. We weren’t poor by any means, but I think they inherited a bit of the Depression Era mindset from their parents, and that trickled down to me.
    In my opinion, that mindset boils down to minimizing waste, which I think is a good way to live. Don’t waste money, don’t waste food, don’t waste electricity, don’t waste time, etc.

  • Britboy007 October 17, 2016, 9:04 am

    I suppose I’m like the vast majority of the population in that I don’t have any passion about my job. I’ve been at the same company for the past 17 years and have great benefits. That aside, I hate getting up in the morning and going to work. I’ve been thinking about retirement for a few years now. We have several years of cash reserves built up and my spouse is working. I’ve never really been interested in making a lot of money. At 54, I would like to find something something interesting to do for the last years of my career.

    • retirebyforty October 18, 2016, 11:59 am

      17 years is a long time. Most people would lose interest in their job over that period. I’m review a book next time that might help you get over the hump – Victory Lap Retirement. There are a lot of choices at your age. You can make some changes and still come out okay. Good luck!

  • David Michael October 17, 2016, 8:07 am

    Thoughtful article Joe. I especially like the idea of living in a middle class neighborhood instead of always striving for a bigger house in a more expensive area. Reminds me of the book, “The Millionaire Next Door.”

    I confess that I was a victim of my own ego when I retired. We bought a lot in a gated community in one of the best areas of our town. We paid for it with cash so that was the right thing to do. But…by selling our old house we could have built a modest one with money to spare. However, together with a famous architect we went a little nuts and built a house beyond our means. I always thought the money would just continue pouring in, but then one day I found I had cancer and decided to sell my company. Everything changed. I did survive and was cured, but without a large income, it was more of a financial challenge to stay afloat. All because we built a house twice as large as we needed. A great lesson learned. Ten years later we sold everything and traveled for 12 years around the world. So that was the good news. Now we are back in the USA living in a modest apartment missing a house with a garage. Life is an adventure no matter what path is chosen.

    • Britboy007 October 17, 2016, 9:09 am

      You are so correct in that life is a journey and we never know what is to come. I don’t think you can put a price on the 12 years of travel experiences. You get to see how other people live and survive outside of the US. We just don’t realize how blessed we are to live in this country despite its problems.

    • retirebyforty October 18, 2016, 11:57 am

      Thank you for sharing your experience. I hope many people read this and realize that money could stop pouring in. Life is an adventure and we need to enjoy it while we can.

  • freebird October 17, 2016, 8:06 am

    Looking back I’d say I had help from attitude problems on both sides of the ledger.

    I never felt my career was secure because since the day I started work, we’ve been through wave after wave of layoffs. Some years were worse than others but we never had the illusion of permanent employment. And you and I both know the long-term future for engineers developing the latest technology. A few will rise into the ranks of upper management and sail smoothly into retirement, but most of us top out in our 40s and endure a growing risk of replacement. It may be easy to change fields and snag a pay bump in your 30s but once you cross 50, staying in the game gets much harder. It was on this basis that I decided early on that financial freedom was the second priority on my list (the first was maintaining health).

    On the outgo side, I guess I’ve never been impressed by anything expensive I’ve bought. Maybe the die is cast on my middle middle class upbringing, but to me what counts as needs are basic room and board. Not sure why but I’m usually put off by the atmosphere in those posh stores and restaurants. I know people who perceive genuine value in those exclusivity experiences, but stuff like that just makes me cringe.

    So there you have it, two wrongs making a right as it were. For those who are optimistic about the long term and allow people around them to influence their beliefs, I’d agree that making the moves to achieve financial independence is a tall order. And probably darn near impossible for Facebook users.

  • Financial Panther October 17, 2016, 8:06 am

    I really love your comment about avoiding expensive neighborhoods! Like you, I also live near a large university, which means we get a mix of old people. young families, and college kids. The great thing about living around college kids is that there’s no need to impress them. They’re all broke anyway.

    A great example of this is during college move out season when I went around collecting as much furniture as I could in order to sell. College kids are super lazy, so instead of selling their junk, they just throw it all on the curb. A lot of this stuff is perfectly good stuff.

    In a high end neighborhood, I always have to sort of sneak around to snag trash people throw out. I don’t want anyone to see me as some sort of dumpster diver!

    But in a college neighborhood, I could walk around grabbing my trash with no shame! No one cares because every college kid is doing the same thing. It’s much easier to live frugally when you don’t have to impress the people around you.

    • retirebyforty October 17, 2016, 2:19 pm

      I love living near a university. The college kids have so much energy and they bring vitality to the neighborhood. Move out days are always fun. My kids picked up quite a few discarded toys last summer.

  • Stefan - The Millennial Budget October 17, 2016, 7:47 am

    Growing up I wanted the nicest car and biggest house. Frugality took a change in mindset for me as it definitely did not come natural. Having the motivation behind certain goals like you mentioned is what makes this journey very comfortable. Yeah we may not have the best technology and stuff but we certainly have a much larger bank account and can live a better life once we reach our desired goal.

  • Dividend Growth Investor October 17, 2016, 6:45 am

    That is a very nice article Joe. I could see how you and your wife became frugal, since you didn’t really have a lavish childhood. I also see how it is a challenge to bring up the kid to be more frugal, since you are better off than you and the Mrs parents were. It is a tough tradeoff, where you want your child to have great opportunities in life, but you don’t want him to be spoiled.
    Perhaps you may have to adopt a more frugal lifestyle for a few years, so that Junior actually sees it. Easy for me to preach of course 😉

    • retirebyforty October 17, 2016, 2:17 pm

      Right! It’s a fine line. We don’t let him buy everything he asks for. He already has plenty of toys so only new toys on special occasions. We probably will have to adopt a more frugal lifestyle for about 5 years after Mrs. RB40 retires. We’ll use the time to build our Roth IRA ladder.

  • Mr. Tako @ Mr. Tako Escapes October 17, 2016, 6:36 am

    Excellent post Joe! I find myself to be naturally frugal too! It’s probably because I grew up that way…I probably learned it from my parents!

    Totally agree the staying the course is extremely important! Finding our way to FI through stops and starts would have been difficult. We just saved consistently (50%+) for years.

  • Walty's friend October 17, 2016, 6:32 am

    A subject I have pondered at length as I am definitely naturally frugal. I have not really determined “why” after all this consideration, but think it is related to being from a large family where we had enough and never felt deprived at all, but looking back on it was less materialistic than most (majority of siblings are also frugal). Reason I comment is that I find myself even more frugal as I grow older and I seem to find more and more reasons why that makes sense. I think my basis currently is realization of what we are doing to the planet with our consumption. I take pleasure in minimizing my impact. I try to drive very little and have discovered I really enjoy biking. Kind of reached an age where travel does not do much for me and appreciate being home more and more. Always loved to garden so enjoy growing food (and flowers!). And recently I realized at this stage in my life, retired early and no longer working, that all the stresses in my life are coming from the things I own – why would I want to buy more crap? And that is leading me to consider the next step at some point of selling the house, getting rid of the stuff and having the option to live where ever and how ever I choose. I refuse to fear moving ever again (just moved and it was awful).

    Bottom line, I cannot imagine how or why I would increase my spending. I consider this to be the greatest gift I received in my personality/make up is that I am content and grateful for what I have and do not know what I would do with more money if it was given to me. Anyhow, your subject is interesting and my thoughts are probably somewhat “extreme” so thought I would comment.

    • retirebyforty October 17, 2016, 2:15 pm

      That’s a great perspective. You sound very similar to Mrs. RB40. She really hate moving too. We want to travel in our 40s and 50s, but I don’t think we’ll cut way back as we get older. We already have a very comfortable life and we don’t need to spend more. The only big wild card is healthcare spending. That’s going to be tough in the next 20 years.

  • Mrs. Picky Pincher October 17, 2016, 6:32 am

    Frugality is more of a permanent mental shift and lifestyle change. I don’t see it as a means to an end (early retirement), but a happier way of life focused on living simply. If people see frugality as a means to an end, I don’t think they’ll be very successful.

    It definitely helps if you’re a naturally frugal person! It’s all about finding happiness in the little things instead of Hummers and jewelry, but the great thing is that anyone can learn to be frugal. 🙂

    • retirebyforty October 17, 2016, 2:12 pm

      I think you are right! We’ve been frugal for a long time and we’re quite happy with our lifestyle. It would be a lot harder if we are trying to be frugal so we can reach early retirement. Can people really stay frugal once they reached the goal? Only time will tell.

  • Ms. Montana October 17, 2016, 5:44 am

    We also lived in a mixed neighborhood. Although it’s probably more middle to lower income. But we love it. It really helps me keep perspective. Our house is very comfortable for us, but probably much more modest than most folks with our net worth would buy. We do lot of work in the community with people living below the poverty line, and I don’t know if they would feel comfortable if we lived in a much nicer place. We had a birthday party at our house this weekend, and one of the teenagers who came was walking around our house saying, “Your home is SO beautiful! This is the kind of home I dream about having when I grow up.” Where are middle class friends are always asking when we are going to move.

    • retirebyforty October 17, 2016, 2:11 pm

      Thanks for your input. It’s great that you are helping the community. It’s good out of our shell and hear different perspectives once in a while. Your middle class friends need to hear what the teenager said. 🙂

      • Ms. Montana October 17, 2016, 4:45 pm

        It was good for me to hear it too. =) If our home was her dream home, would she be comfortable in our dream home?

  • Matt @ Optimize Your Life October 17, 2016, 5:21 am

    It is kind of crazy how early in life people develop the strengths that can become instrumental in their adult lifestyle. I don’t think I was naturally frugal like you guys, but I was definitely naturally inquisitive, which I feel is one of the reasons that I ended up finding out about FI.

    Great point on avoiding expensive neighborhoods. It is very draining to feel like you are below average and it is easy to feel that way when you are surrounded by people with nicer houses, cars, clothes, and gadgets. It can certainly make the path to FI more challenging.

    • retirebyforty October 17, 2016, 2:08 pm

      It’s great that you found out about FI pretty early in life. I didn’t find out about FI until my mid 30s. Luckily, we were frugal already so we had a head start on most people.

  • Jim @ Route To Retire October 17, 2016, 5:14 am

    Always enjoy reading your posts, Joe – a lot of times I see myself in what you have to say. My wife and I are naturally frugal as well. I noticed that as we continue to grow older, we also have less and less interest in material things and more of a focus on just being together – experiences, so to speak.

    We have a lot of the same motivators as well. I think my wife still needs to figure out some things for FI, but she’ll probably dabble with volunteer work until she finds what makes sense.

    — Jim

    • retirebyforty October 17, 2016, 2:07 pm

      I agree. I’m not interested in material things as much as I used to. I don’t need the latest gadgets and I can do without a lot of stuff. People all over the world live on much less than we do. If you make $32,000 per year, you’re in the 1%. Life is very comfortable in the US.

  • Mr. PIE October 17, 2016, 5:07 am

    “Doing the work” early on in a career when you have more energy and motivation will undoubtedly propel your salary forward. Even in those years, saving 15-20% is powerful. Max out the 401k each year and let it ride. Start a 529 when your kids come into the world and add to it steadily and let it ride.

    For any family with young kids, you get to see the value of time. With two parents working, it can get incredibly hard to find that time. But if you can stay disciplined and save a bit more, the whole thing starts to blossom. You might even find you don’t have the energy to go to that fancy restaurant as much as you used to or desire to upgrade that home and deal with relocation hastles. All good for saving more money!

    But back to my first point. Earning more money by doing the work will make it so much easier to retire earlier if you don’t get carried away by shifting the balance towards excessive lifestyle inflation. We learned that a bit later than we should have. But better late than never.

    • retirebyforty October 17, 2016, 2:05 pm

      I’m really glad I started saving when I was young. 15% wasn’t huge, but it was a great start. It taught me to invest for the long term. I agree that doing the work early is the best way to go. I got some promotions early and it raised my income for quite a few years.

  • Alberto October 17, 2016, 4:55 am

    We are the sum of our experiences. Therefore thereally are no right or wrong paths to FI.

    FI has physical and psychological dimensions to it.

    Frugality is a factor or trait in the physical dimension that originates in the psychological one. We are all rooted this way.

    Understanding our physical environment and conditions goes a long way towards understanding FI.

    In our society, we do not properly value time. Ours and others. When someone trades dollars for hours, there is an implicit exchange of value that goes beyond the dollars. We sell our souls. In our society, the free enterprise system allows us to through enterprises generate value that can produce time.

    The psychological dimension has to do not only with our experiences how our mind interpret them and evoke action or motivation. Fears, anxieties, security and peace of mind are factor or traits that manifest themselves in many ways.

    FI can be defined as the point when one can trade time for money as a commodity. Not a bad trade if one values freedom and happiness of self and others.
    In this dimension, we encounter and have to conquer our greatest enemy. Ourselves! We need to over come our thoughts and feelings of inadequacy to learn self love and worth. The fight and struggle continues but FI does something special that most never achieve. The sense of security and peace of mind.

    We are the sum of our experiences but also the reflections of those experiences and ourselves.

    • retirebyforty October 17, 2016, 2:03 pm

      That’s deep. I don’t usually think about the psychological aspect of it, but FI has a big effect. It’s too bad most people don’t know the benefit of FI.

  • Apathy Ends October 17, 2016, 4:43 am

    Being frugal was a habit that took awhile to nail down for us – definitely not in the naturally frugal side ( either are our parents)

    Not having to go to work is enough for me to stay motivated for FI

    • retirebyforty October 17, 2016, 10:13 am

      Nice. That’s my big motivation too. Working is good, but I want to do it on my own term. Being self employed is a great fit for me.

  • The Green Swan October 17, 2016, 4:30 am

    I don’t think I would be considered naturally frugal. Growing up I wanted all the nice things, but as I became responsible for my own spending in college and on my consciousness grew and I paid more attention to opportunity costs. Living a frugal life is what has helped propel my net worth and my wife and I hope to reach FI in about 5 years or so.

    I think my motivations are similar to yours. Spending more time with the kids and their activities, living a healthy lifestyle, and traveling often.

    • retirebyforty October 17, 2016, 10:12 am

      College was a big part of us too. Our parents didn’t have a lot of money and we lived pretty cheaply. I knew they worked very hard to send me to college and I valued my time there. A lot of kids didn’t appreciate the opportunity.

  • Sandy T October 17, 2016, 4:30 am

    Great post! I grew up in a middle class family, with a dad who was very frugal. We didn’t get everything we wanted, but we got what we needed. I feel very blessed growing up the way we did. I think most kids these days won’t have that, as so many parents hate to say no to their child. But I digress. I think it helps growing up frugal, because it gives you an example to look towards.
    I’m an engineer that got very fed up with my job. Since my husband and I live well within our means, and have been frugal, I was able to quit, and take time off to finish my masters. While I feel very blessed to be able to do this, I see other people that buy the latest new phone every six months, get a new car every year, and end up living paycheck to paycheck, and they seem mad at me that I can do what I am doing. I want to mention that I keep my phone until it dies, I have a car that is paid for. I don’t keep buying the fancy things. I don’t think they will understand. So I’ll keep living my life, and hope and PLAN on retiring by 50…only 13 more years!
    Keep up the great posts!

    • retirebyforty October 17, 2016, 10:10 am

      Thank you for a great example! You have it figured out. I think people need to be exposed to the concept of financial independence so they can appreciate it. Most people just don’t think it’s a real option for them. Good luck on your journey. Are you changing career?

  • [email protected] Smarter Decisions October 17, 2016, 3:38 am

    Hi Joe,
    We are at FI and did I believe this line is what did it for us – “find a comfortable balance of expenditures and then minimize lifestyle inflation”. We never really planned to early retire (my husband retired at 55) and I am now semi-retired at 49. Your comments about housing are INCREDIBLY important. We also chose a modest house in a nice neighborhood. No one here is trying to “one up” anyone and we actually all do a great job of helping one another (sharing things like tools, ladders, small utility trailers, etc.) I have colleagues who live in a “fancy” neighborhood. They pay a “lake view” tax (and pay more overall taxes), and they spend more on Halloween decorations than we do for our monthly grocery budget. And yet they complain about work… All about the choices you make and staying the course!

    • retirebyforty October 17, 2016, 10:08 am

      Thank you for your comment. Housing is such a big percentage of expenditure in the US. A big house in a wealthy area can lead to spending a ton of money. I like regular neighborhood much better. 🙂

      • Joe October 17, 2016, 10:17 pm

        I think it depends what area you are in. In the SF bay area, the bigger the house you bought and the more debt you used to buy it, the richer you are now, because real estate went up faster than the stock market and leverage magnified the gains. Those who didn’t buy a house or bought a small house have fallen way behind financial-wise.

        • Nicoleandmaggie October 18, 2016, 4:48 am

          CA is special. Anywhere else in the country gains would be limited by increased property taxes.

  • Lazy Man and Money October 17, 2016, 3:33 am

    My mother made looking for bargains/deals a fun game. I think that’s where I got my frugality. I would say that I grew up in upper-middle class environment. We still had plenty of things such as a new IBM PCjr. and used cars at age 16.

    If you can prioritize your spending on things that matter and have a focus on finding the bargains/deals, you can have a good amount of luxury.

    LazyJr thinks we can just get anything at the store. We’re trying to introduce the concept of money. Having just turned 4 he hasn’t mastered the concept of deploying limited resources effectively ;-).

    • retirebyforty October 17, 2016, 10:06 am

      That’s a great idea! I will work on that with our kid. You’re right about kid. Whenever we don’t have something he’d say – let’s go get it at the “…” store. Lego, bicycle, etc… Also, he has too much cash in his piggy bank…

      • adumbby October 18, 2016, 6:18 am

        i’m sure your parents might have said the same about you?

        • retirebyforty October 18, 2016, 8:53 pm

          You’re right. My dad’s childhood was very difficult.

  • Dividends Down Under October 17, 2016, 3:24 am

    Nice post Joe! I completely agree with you, we have a natural tendency to be jealous of things, or want them, even subconsciously. It just encourages us to spend more.

    We live in a very modest area, though it’s a nice family suburb of course. We don’t want fancy cars, an ultra modern house, or anything like that. We encourage the family that listen to us to save their money and do their best. We feed off each other’s excitement to do well with our money 🙂


    • retirebyforty October 17, 2016, 10:04 am

      It’s great that your family listens to you. The journey is much easier when you have some encouragement along the way. I think living in a modest area is a great way to be grounded in reality. People in wealthy area compete with each other too much.

  • Mike Drak October 17, 2016, 2:53 am

    My pet peeve is why don’t the banks and financial advisors teach their clients about FI. Instead they focus just on retirement which is a long way down the road. I think I finally figured it out. How can advisors keep a straight face and preach frugality when they drive fancy cars, wear expensive suits, watches etc. Would you ever engage an advisor that wore cheap clothes? I would love to see the statements of net worth for some of these advisors just like Trump’s tax returns. (Sorry had to throw that in)
    We need to teach FI to kids before they start working which would give them a chance to save aggressively right out of the gate and allow them to shorten the time required to reach FI. One of my regrets is that my father didn’t teach me about FI but he did teach me to be frugal and it worked out well in the end but it would have been easier to have a specific goal in place.

    • retirebyforty October 17, 2016, 10:02 am

      I think you’re right. Financial advisors need to look successful and that’s not frugal. Maybe you can start a firm that specialize in FI instead of retirement? That’s a great business idea!

  • Mr. RIP October 17, 2016, 2:16 am

    Great post! The more I think about it, the more I convince myself that being a “natural frugal” is what made my journey. It’s the single most important skill you can learn. And I’m also convinced that there’s no lower bound to it. Take the ERE mindset. That’s this concept brought to the extreme. Well, not the extreme extreme actually… what about buddhist monks? Learning how to be happy without the illusion of purchases is the key.

    • retirebyforty October 17, 2016, 10:00 am

      It’s a huge advantage to be naturally frugal. I don’t know if we can instill that value for our kid. He lives in an environment that’s plentiful. I think a year of travel would help a lot.

      • Joe Wasylyk October 23, 2016, 11:09 am

        Retirerbyforty, Greetings from someone that semi-retired at 45 years old. I was down-sized, ostracized and capsized. With limited resources I was left to mange life as a single parent. and I’m very grateful because I am naturally frugal. I want to make a difference and have taken on the Seniorpreneur Project that takes seniors 50+ to a higher level in the areas of Lifelong Learning, Finances & retirement Lifestyle. I suggest not to take your victory lap to early because I’m finding too many seniors in their transition from a corporate job to doing whatever you want is much more challenging than you think. Today I’m 71 years old with my own Book- Encore! Encore! Seniors 50 Plus As Entrepreneurs+Their Time Has Come. my own website and my own blog. Personally, my own Victory Lap will come in the last chapter of my life when I have helped thousands of seniors become more active, creative, and productive in their semi-retirement and full retirement life.

  • Michael @ Financially Alert October 17, 2016, 12:48 am

    Joe, I agree that knowing your motivations and WHY are super important. These are what allow you to push forward with frugal choices and not feel a sense of loss while everyone else is spending around you.

    Having a sense of frugality will definitely help guide as a compass to FI, but I personally believe it’s okay to ebb and flow with spending from year to year. For example, if you earn more in a particular year and save 60% of your income, I don’t see a problem saving 40% the following year (maybe splurge on a family vacation) to average out to a 50% annual income savings (if 50% is your overall target). However, I would be frugal FIRST and then splurge. I think a little variation goes a long way towards keeping things interesting on the journey to FI.

    • retirebyforty October 17, 2016, 9:59 am

      I think it’s okay to adjust your spending as well. Saving 40% is still extremely frugal compare to everyone else. 🙂

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