A little obsession is good because it drives us to accomplish something. I was obsessed with getting my engineering degree when I was in college because my parents worked hard to send me there. Many kids were there to have fun, but I just wanted to get through it. Fun was secondary. Mrs. RB40 was an obsession – she went off to Peace Corps for 3 years after college and I was obsessed with getting her back. (BTW, it worked out despite what everyone said. We won!) Blogging and early retirement was a big obsession for a while, too. I routinely stayed up until 1 am when I was working full time so I could blog regularly. It was tough, but I pushed through it.
There were many more trivial obsessions like playing video games or learning how to play the ukulele. I think a little obsession is fine as long as it doesn’t take over your life completely. This applies to early retirement, too. There are times when it is good to be obsessed with early retirement. However, you have to be smart about it over the long haul.
Obsessing with Early Retirement
Early retirement is a marathon, not a sprint. Check out Mr. Money Mustache’s The Shockingly Simple Math Behind Early Retirement if you haven’t seen it yet. Even if you save 50% of your income, it’d take 17 years to retire early. It’s just not good to be obsessive about something for that long. Being overly obsessive about early retirement can be a detriment to your health, relationships, and social life. You have to pace yourself when you’re chasing early retirement. It is impossible to sprint the whole way. You’ll burn yourself out if you try. However, there are two crucial spots where it pays to be obsessive.
When you first learn about early retirement aka FIRE
There are many reactions when people learn about early retirement.
- Indifference – It’s not for me.
- Disbelief – This is a scam.
- Obsessive convert – Wow, maybe I can do this.
- Shocked – Does this 4% rule thing really work?
This is the right time to get obsessive. Most people drift through life without a financial purpose. They make money and spend it just as fast. We’ve been taught that everyone should work until they’re 65. Then they retire to a life of ease. That’s the regular view of work in most developed countries.
We were moderately frugal before I learned about early retirement around 2008. We made good income and we didn’t spend frivolously. However, there was still a lot of wastage. We had cable TV, two cars, a house in the suburbs that was way too big for us, ate out whenever we wanted, took exotic international vacations, purchased stuff without thinking too much about it, and went to the movies often. We lived within our means, but it was a pretty typical lifestyle.
In 2008, we already maxed out our 401k contributions and Roth IRA. That was much more than most people ever did so I thought it was enough. I could have kept working at Intel and then 15 years later, I could have qualified for retirement. It’d still be early retirement because I’d be 50 in 2023. We could stay on the company health insurance plan and perhaps have some pension income. (The formula was complicated. The pension plan would help out if you don’t have enough money or something silly like that. I didn’t understand it at all.) Anyway, we thought we were doing well financially and then I found out about early retirement.
The Discovery Phase
I got excited after I discovered early retirement because it was clear to me that FIRE was within reach. We’ve been saving and investing for over 10 years so our foundation was solid. I could early retire sooner than 50 if we streamlined our expenses. I got obsessive and reduced our expenses as much as I could. This boosted our saving rates and shortened my FIRE timeline even more. I didn’t have to wait for the company to okay my retirement. I could do it on my own. It was a good thing too because my job satisfaction plunged as the Great Recession dragged on.
Mrs. RB40 got on board with reducing expenses because she already was frugal. She never liked spending money so it was a relatively easy transition for her. We still lived a comfortable lifestyle. We just removed the stuff that wasn’t that important to us. International trips were still a priority for us because we enjoyed traveling. However, we reduced expenses in all other areas. We ate out less, shared one car, and moved to a smaller home. There were plenty of free and cheap entertainment options in Portland so we still enjoyed life.
The Autopilot Phase
Once we streamlined our expenses, I got less obsessed with early retirement. There wasn’t much more I could do to reduce expenses after the initial frenzy. I looked for opportunities to create more income, but that was a long process. We got raises at work, invested in dividend stocks, purchased some rentals, and I started blogging. All these passive income streams took time to build.
Once you get through the initial discovery phase, then you need to dial down your obsession a bit and put it on autopilot. The early retirement journey is a long slog. You have got to be able to enjoy life in the meanwhile. The most important things are to stay healthy and maintain a good relationship with your partner.
Health – You can’t compromise on health because you won’t be able to enjoy your money if you’re not healthy. It probably will cost more money in the long run if you put wealth before health. Luckily, being frugal is mostly good for your health. We cooked at home more which is much healthier than eating out. I still pay for my gym membership because that’s the only way I’d exercise regularly.
Relationship – The other big concern is maintaining a good relationship with your spouse. Building wealth is much easier if a couple works as a team. Luckily, Mrs. RB40 was already frugal so it wasn’t a big change for her. Also, we didn’t cut out everything that cost money. We still went out occasionally and saw a show once in a while. It’s all about finding a good balance.
This autopilot phase can last for years. You’ve got to be able to enjoy life while you’re in this phase. Don’t drive your partner away by cutting back too much at once. If your partner isn’t naturally frugal, then you might need to take it slow and keep chipping away. Also, it’s not healthy to stay in a job you hate for too long. This is a long stretch so you need to do something you can tolerate. It’s a good idea to find a better job while the economy is still good instead of working somewhere you don’t like. You’ve got to save some energy for the final stretch.
The End Game
The end game phase is equivalent to the last mile of a marathon. The finish line is close, but you’re not there yet. At this point, you’ve got to put your head down and push through the pain. That’s how I felt during my last year on the job. By then, I hated going to work. The stressful job caused a lot of mental and physical anguish that last year. I was miserable, but I just didn’t want to make any changes. I guess I could have looked for a better job, but I was so close to the finish line. I didn’t want to take any chances at that point. I became obsessed with early retirement and went over my spreadsheet every day. Life was not fun, but thankfully, it was only a short time. It worked for me so I think it’s okay to be obsessed during this final stretch.
Early Retirement Obsession Chart
Check out this chart I made.
This is what I think your obsession with early retirement should look like.
When you don’t know about early retirement, you don’t care about it. In the discovery phase, your obsession spikes. This is when you put your financial house in order and set up a plan to retire early. Once you’ve got your finances on autopilot, you should dial it back. After all, this phase can take many years. Near the finish line, it’s okay to get obsessed again because you want to get it over with. Whatever you’ve done so far is working so keep it up over this final stretch. Put your head down and push through those obstacles if you need to. I wish you better luck than I had, though. It’d be better to cruise through the finish line, too. After early retirement, you can relax a little and enjoy life more.
Whew, this post ran a little long. My point is it could take years to achieve financial independence and retire early. It’s good to be obsessive in your first and final phases of the journey rather than throughout the entire process. Your health and good relationship with your partner need to come first. FIRE is a great goal to have, but don’t let it take over your life for too long.
Where are you in your early retirement journey? Are you obsessed with it?
Image by William van Wingerden
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.