This recent reader email struck a chord:
I’m a software engineer trying to plan my plunge [into freedom]. I’m young, so I figured I would grind it out, save a lot, and retire early.
But after a health scare, I realize mini-retirements might trump early retirements, and I want to achieve a lifestyle similar to yours.
It’s difficult to figure out what I should be prioritizing, however. Side hustles, remote work, rentals, starting a business?
Oohhh!! I love this email.
On the surface, it’s a tactical “how-to” inquiry: Should I launch a business? Buy a rental property?
But under the surface, this reader hints at a deeper question: What’s the optimal lifestyle?
Mini-retirements? Early retirement? Something else?
Mini-Retirements vs. Early Retirement
We’ll define ‘retirement’ as escaping the daily grind. It comes in four varieties:
Early Retirement – Escaping the grind at ages 25 – 55.
- Advantage: Obvious.
- You’re financially free (a concept we’ll describe below).
- Your freedom is permanent.
- You enjoy this while you’re young.
- Disadvantage: Trade a Decade
- You devote your 20’s, 30’s or 40’s towards a lifestyle that starts later.
- You defer life (travel, passions, etc.) for 10-20+ years.
- None of us know how long we’ll live. (I’m sorry, but we don’t.) We need to simultaneously plan as though we’ll live to be 100, and also plan as though these are our final months. There’s a wisdom to carpe diem.
The work life of an early retiree.
Traditional Retirement – Escaping the grind at age 55+
- Advantage: Life at a leisurely pace.
- Your freedom is permanent.
- You’re financially free (eventually).
- You’ll only need to save 15-18% of your income towards retirement (rather than the 50-75% that the Early Retirement camp saves).
- Everyone else is doing it.
- Disadvantage: Obvious.
- Retiring at 60 is different than retiring at 35.
- You might spend decades living a suboptimal lifestyle.
- By retirement, your health might have faded. (That’s true of any age, but the likelihood increases as you age.)
The traditional working life, followed by retirement at 55+.
Many people assume these are the only options.We’re taught “work” is a permanent condition, until we reach “retirement,” which is also a permanent condition.
We’re taught that both exist in binary, mutually exclusive states.
But there are other roads, as well.
Mini-Retirements and Semi-Retirement
Mini-Retirements – The “interval” approach to work and life. It’s characterized by alternating intense work with rest and fun.
This is the career equivalent of running sprints: Sprint, rest, sprint, rest.
Some freelancers who work on a project-by-project basis can fall into this category.
Example: Work for 6 months; adventure for the next 3-6 months. Surf, lay on the beach, write your novel, play guitar, learn to tango.
Return to work for another 6 months. Quit and repeat.
Advantage: Freedom at all ages.
- There’s a wisdom to not deferring life for too long.
- Start now.
- You’ll enjoy rest more after an interval of hard work. (It’s like eating a delicious meal after a hard workout — it tastes better.)
- You’ll return to work feeling fresh and re-invigorated.
- You can cherry-pick the projects that fascinate you the most.
Disadvantage: No “permanent” escape.- You’ll have to return to trading-time-for-money.
- You’re not financially free.
The look of sprinkling mini-retirements throughout your life.
Semi-Retirement – This is a perpetual state of semi-working.
If “mini-retirements” is like running sprints; “semi-retirement” is like strolling a marathon … with breaks for donuts.
Lifestyle entrepreneurs and part-time workers can both fall into this category.
Example: Work 15 – 25 hours/week. Spend the rest of your time surfing, skiing, sailing or scuba-diving.Advantage: Start this year.
- Rather than deferring your dreams by a decade+, you can launch a semi-retired life within a few months.
Disadvantage: No “permanent” escape.- You still trade time for money.
- You’re not (necessarily) financially free.
Your work life, in a permanent state of semi-retirement.
You might be thinking: “Wow, sounds like rich people talk.”
“This is great in theory. But I need help paying my bills.”
If so, keep reading.
Stages in Your Financial Life
“Hold on, Paula. You’re saying I can launch a semi-retired life this year? I can barely pay for a bottle of shampoo.”
Your financial life happens in stages.
You need to conquer Ground Zero and Stage One before you can think about optimizing.
Ground Zero
Many people start at Ground Zero — often during college or immediately after graduation, though sometimes this happens mid-life due to job loss, divorce, illness or other challenges.
At Ground Zero, your day-to-day life includes:
- Hyperventilating because the rent is due.
- Stressing out because your electric bill is $15 higher than you budgeted for.
- Listening to your stomach rumble, because you forgot to pack lunch and can’t spend $6 on a burrito.
- Living with 6 roommates in a three-bedroom apartment.
- Keeping the thermostat at 55 degrees all winter.
At Ground Zero, you shop at thrift stores, eat pasta and rice, and squint because you can’t pay $70 for eyeglasses.
Don’t worry. You’re not alone. I’ve been there. Millions of us have been there.
We’ve gotten through it. So can you.
If you’re at Ground Zero, you’re not ready to optimize. You’re on the first step of your financial journey — not the last.
- Boost your income with a side hustle.
- Drop your expensive cell phone plan.
- Cut the cable TV.
- Join the One Percent Challenge.
You’ll build yourself to Stage One.
Stage One
At Stage One, you have a small emergency fund (perhaps 2-4 weeks of expenses).
You’re free from most credit card debt. You contribute roughly 5 percent into a retirement fund.
You have enough money visit grandma for Christmas, own a smartphone and buy red meat at the grocery store.
You’re still not ready to launch mini-retirements (or semi-retirements), but you’re closer.
Stage One is where you get your financial house in order.
- Read the Beginner’s Guide to Financial Awesomeness.
- Build solid cash reserves (3-6 months of expenses).
- Repay high-interest debt (anything above 8 percent APY).
- Boost your retirement balance.
Done? Good. Now it’s time to optimize.
This is where choosing-your-optimum-lifestyle comes into play.
At this point, the questions are:
- Which one should I choose? Early? Mini? Semi?
- How do I start?
Crucial questions, but in order to answer, let’s chat about one last definition.
Financial Freedom
The ultimate goal. The apex of everything.
Financial freedom comes from creating multiple streams of passive income that fund your lifestyle — while demanding minimal time.
You achieve this by creating systems in which your money earns money.
These systems include (but are not limited to):
- Rental properties
- Royalties from software, books, art, music, etc.
- Businesses that you’ve established but your employees/contractors manage
- Stock dividends
- Bond and Treasury bill payouts (meager, but I have to include it)
Financial freedom is my definition of “wealth.”
Wealth is measured in time, not dollars. If you must trade time for money, you’re not wealthy, even with a million-dollar portfolio.
“B.S. I don’t think anyone is financially free.”
Really? What about retirees?
Anyone who reaches “permanent retirement” is financially free. They’re living on their assets.
This is true regardless of the age at which that person retired: 35, 45, 65.
Starting Now …
By contrast, you can enjoy mini-retirements or semi-retirements now — without being financially independent.
You can lounge on a Caribbean beach or hike in the California redwoods.
You can surf in Brazil or snowboard in Switzerland.
You can spend time at home with your family.
You can read books and work on passion projects.
You’ll have to eventually return to the workforce, at least for awhile, until you “cash up” and repeat.
Back to the Original Question …
Let’s go back to the original statement:
“After a health scare, I realize mini-retirements might trump early retirements …”
Let’s pause here.
Mini vs. Early are apples and oranges: both delicious fruits, both part of a balanced diet.
>> Approach this with a “both/and” mentality, rather than an “either/or.” <<
Don’t delay your passions for decades. None of us know our Final Expiration Date.
If we’re called to pursue some passion, pursue it, even if it makes no financial sense.
Spend a year traveling Southeast Asia, tour the nation with your band, or live in the countryside and paint.
These goals make no financial sense, but they’re amazing, life-changing decisions. (Just avoid debt.)
As I mentioned on Facebook a few weeks ago, traveling the world at 25 is different from traveling at 35, 45, 55, and beyond.
It’s not better or worse — it’s different.
Here’s why:
1) Your interests, values, abilities and limitations will change.
2) The outside world will change. The world in 2016 is radically distinct from the world in 2026, 2036 and 2046.
Don’t delay.
Enjoy mini-retirements (or semi-retirement) at all ages, not just after you retire.
By taking mini-retirements, you can experience more of the world — and those experiences will forever shape your life, work and career.
“How Can I Create Mini-Retirements?”
Side hustles (side businesses) are one of the fastest and most effective ways to launch a mini-retirement lifestyle.
I’m a firm believer that everyone should have a side hustle, even if you intend to stay in your 9-to-5 forever.
Layoffs happen. Don’t keep all your “income eggs” in one basket. Diversify your income.
Erika, for example, earns an extra $20,000 per year through her side hustle — enough money to travel to Costa Rica, New York, San Francisco, Seattle, San Diego and Las Vegas.
“Extra money sounds great, but my boss won’t let me take 4 months off.”
Then fire your boss.
While you’re still employed at your 9-to-5, launch a side hustle that you can run from your laptop.
Work on this before work, after work, during days off. Scale this until it can cover your living expenses. Then ditch the 9-to-5 and live on laptop-based self-employment.
Location independent work (remote work) is the result of a side hustle blooming into a “full-time” gig.
(“Full-time” refers to the income supporting you 110%, rather than some arbitrary number of hours per week.)
Once you can support yourself through laptop-based work, you’re ready to travel anywhere — Bali, Bolivia, Belize — as long as you have an internet connection.
Limit your working hours (to whatever you’d like), and hire assistants to shoulder the remainder.
Living in a low-cost area makes a huge difference. If you want to stay in the U.S., I recommend avoiding expensive centers like NYC, D.C., L.A., and S.F., unless you have hacks that help you live there cheaply.
If you love large cities, check out major U.S. cities with a low cost of living, like Las Vegas, Miami and Atlanta.
For best results, move overseas. Thailand, Colombia and Indonesia are among the many countries where you can live like royalty for a fraction of the cost-of-living in the U.S.
You’ll also find a vibrant ex-pat community (Americans living abroad), with incredible new friends.
“What about Rental Properties?”
Rentals are hyper-effective for crossing the ultimate finish line (financial freedom).
But they’re terrible for creating immediate mini-retirements.
If you’re aiming for near-term results, prioritize launching a laptop-based lifestyle business first.
Use the proceeds from this business to invest in rentals and pave your road to financial independence.
“What Type of Lifestyle Business Should I Start?”
You’ll need a skill. You don’t need a diploma, you just need a skill.
Ideally, this skill should be unique, niche and hard-to-replace.
Upwork.com has an (unfair) reputation as a website where freelancers get bottom-of-the-barrel rates. That’s an oversimplification.
If you’re competing with workers in the Philippines, Pakistan and India who are willing to work for $4 per hour, and you’re competing on price, you’ll earn pennies.
Don’t compete on price. Compete on quality and niche.
If you search freelancing websites, you’ll notice that contractors with niche skills can command $100/hr or more.
(You can command higher rates if you find clients through word-of-mouth referrals.)
Let’s imagine:
- You command $100/hr
- You work 18 billable hours per week (3 hours per day, 6 days per week)
- You spend 7 hours per week on administration/marketing/emails (1 hour a day)
- You hire a virtual assistant at $12/hr to help with repetitive tasks, 5 hours/week
You’re netting $90,480 per year (after expenses), working a 25-hour week.
“$100 an hour sounds way too high!”
Really?
Here are images from Upwork showing contractors billing hundreds of hours at that rate or higher.
Their skills range from SEO and copywriting to business planning to design to development.
(I found this in less than 5 minutes.)
If the limiting beliefs in your mind struggle with this suggestion of prosperity, ease into the idea by chopping that rate in half.
Let’s walk through the math:
You bill clients at $50 per hour. The above assumptions stay the same. (You work 25 hours per week; your assistant earns $12).
How much will you make?
You’ll earn $43,680 per year (after expenses) — working part-time from your laptop.
Can you achieve this on Day One? No. First you’ll need to develop a niche skill, such as:
- Programming in a specific language
- Writing about a particular topic, or with a specialized voice or style
- Consulting in a niche field
Books and blogs are my favorite (classic) ways of learning new specific skills, though you can also take online training classes.
Check websites like Khan Academy, Code Academy, Udemy and Coursera, and look for bloggers who offer online courses, if you like their writing and teaching style.
Skill-development is Step One.
Next, your first few months will be dedicated to hustling.
You’ll look for clients, focus on marketing, and think about creating systems.
You might spend 20 to 30 hours marketing during the first month. You’ll also price yourself lower, perhaps at $15 to $20 per hour, to gain experience and confidence.
By Month #3, you spend only 10 to 15 hours marketing, and raise your rates to $25 – $35 per hour.
By Month #6, your lifestyle business is rolling. You’ll have regular clients that form your “income base,” and you’ll raise rates on future projects.
You’ll have client testimonials and word-of-mouth recommendations. You hire your first assistant.
And then … hit the beach. It’s time for a mini-retirement.
Your life is waiting for you.
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I had a bad case of OMY as my FIRE approached. I conquered it by telling myself I could work a few months a year as a contractor to cover the slack if I was falling short. Fortunately, I never needed the contract work. My point is, you are correct that it is easy to think of retirement as a binary decision for no logical reason. Life is more flexible than we’ve been conditioned to believe it is.
“Life is more flexible than we’ve been conditioned to believe it is.” — heck yeah!!
I absolutely loved this. I want to move to London and start and see Europe after leaving the military. I have been battling in my mind if its the right thing to do and reading this post has giving me some more points to look at. Thank you so much.
@Petrish — DO IT! One of the best decisions of my life was letting my income fall to (almost) $0 between the ages of 24 to 27, living on savings while I traveled. Sure, it “technically” makes no financial sense. I missed out on retirement contributions and the corresponding “compounding interest”; blah blah blah. But traveling at that age (and during that era of history) is an experience that forever changed my life, improved my long-term career [by giving me the confidence to become an entrepreneur], and that I’d recommend to anyone.
[This blog exists because of that trip.]
The world changes rapidly, which means you should see it at all stages. I spent six weeks in Egypt in 2008 — two years before the Arab Spring Revolution. The Egypt that existed in 2008 is remarkably different than the one that exists today, and nothing can replace the opportunity to see that region in both the pre- and post- era.
In addition, you (yourself) change rapidly, as well. The first time I went to Costa Rica, when I was 20, I moved around from town to town … always on the go. When I went back last year, at age 30, I parked myself in one spot for two weeks, more interested in absorbing one locale than seeing the whole country. I don’t think that either is better or worse; they simply reflect the energy levels and priorities that I had at these two stages of life. Experience the world in all of them. 🙂
I wish we could live at least 150 years, to have enough time for work, hobbies, traveling and retirement, kids, and grandkids, pets and gardening, reading and writing…
I was laid off on Tuesday, and I am happier than I’ve been in a long time. I live in San Francisco,
My side hustles are fairly passive, AirBNB, renting out my house in San Jose (breaks even, so not really an income, but building equity) and house/dog sitting.
I’ve had so many ideas floating around, but my job left me exhausted as I never shut it out of my mind, even on the weekends, I’d wake up in the middle of the night stressing about Monday.
So “Watch this space” as I can’t wait to share more. I am going to do everything I can to never work in a corporation again.
@Lars — That is awesome! Congrats on your layoff! I suspect that will be one of the best things that’s ever happened to you. An entire world of freedom / hustling / adventure opens up when you don’t need to Work for the Man anymore. 🙂
Hi!
Great article, it really gets me amped to go for mini retirement. I work full time as a marketing agent for a real estate company and have a background in Veterinary Medicine. My husband and I are flipping houses and I am developing two blogs- one for real estate, one for veterinary. I have been struggling with what angle to take to make them profitable. I would LOVE to offer copy writing and blogging services to other real estate companies and veterinarians, as I love writing and know a great deal about these two subjects. How would you recommend launching the blogs, and what angle should I take for advertising? Thanks!!
@Dina — Perfect! I love that you’ve niched down. It’s much easier to consult as a copywriter and blogger if you have a specialty — there are a lot of people who are knowledgable about blogging/copywriting, and there are a lot of people knowledgable about veterinary services, but there aren’t many people who do both. This is why niching down is so effective.
To find clients:
Bob Lotich wrote a great book that provides an introduction to blogging, though honestly I’d focus first and foremost on gaining a clientele, rather than building a blog. Read this post on building a side hustle. Best of luck!
I love the idea of taking a ‘mini-retirement’ and taking a few months off. In fact, I’m planning on taking one starting this May after I quit my corporate accounting job and ditch my cubicle. The plan is to travel for at least a few weeks, do some financial literacy volunteering, and switch careers to become a financial planner. I’m still working towards financial independence but realize I don’t want to retire in the traditional sense at 65. I want to create a lifestyle that I never want to quit and to me that’s helping people with their finances. Thank you for this post, as it shows that it’s not necessary to live the deferred life plan, there’s many options.
Lifestyle Accountant — I find the idea of financial literacy volunteering intriguing. What sort of projects have you found to get involved in? Any specific groups or organizations? I have a real interest in helping people learn about improving their lives by better understanding the financial side of life, and I would truly appreciate any ideas you might be able to offer. Thanks!
Hi Peach – That’s great you want to get involved too! Financial literacy is very intriguing and I’ve found it to be very much in need in my community. I’m currently volunteering in AARP’s Finances50+ program (aarp.org/finances50plus). I host workshops at a local library where I talk about budgeting, credit card debt, and protecting assets. It’s geared towards people 50 and older, but it’s certainly for any age, but for people who want to improve their finances. I think the earlier to start learning about personal finances, the better. I really like the idea of talking about a subject I am passionate about and it’s helped with my fear of public speaking. I’ll be writing more about it on my blog in the coming weeks and how I got started volunteering with the program. Good luck!
I’d like to offer a bit of insight from someone who tried the “mini-retirement” way, which I will call freelancing. I’m in the “grey area” you cite, and I really wish that when I’d started freelancing, the FI blogs had been around, because I’m very non-materialistic and I would have KILLED it at early retirement. But, anyway…
If you’re going to freelance, try to have a large chunk of change saved up first. Like, huge. The dream of freelancing is that when you’re not working, you can go travel. The reality, for me and for a lot of my friends, is that you don’t leave town because you might miss a great call, and you spend an enormous amount of non-working time prospecting for work.
I’m a freelance art director. When I was in Thailand for a month, I did one job on my laptop for a small agency. But most places want you to come in and work on site. That’s where the big money is. So that’s why it’s hard to leave and miss that great call.
Technology will change what you do for a living, and way faster than you think. The biz you leave your job to do freelance or from abroad might not exist in 10 years. Anyone who left their job 100 years ago to freelance horseshoe, ain’t working right now. OK, they’re not alive, either, but I’m exaggerating to make a point. In my job, with my computer, I personally do at least 6 jobs that used to be filled by other people. Entire BUILDINGS used to be filled with typesetters, retouchers, production people–all now on my computer. And what comes after the computer? These businesses everyone’s building on the internet, what if something happens to the internet? Don’t laugh, it happened to paper. So that’s why I cast another vote for working as hard as you can for a decade, saving like hell, and then quitting to freelance after you’re FI or very close.
Another reason for early retirement vs. mini-retirement: you age in other people’s eyes much faster than you age in your own. I know people who were making 2500. a DAY and threw it all away because they thought they were going to be able to freelance like that forever. But technology changed, and they’re seen as too old to adapt.
Yes, we all are going to die, and personally, I’ve had two severe health crises. But the odds are, it will happen in your late 40’s/early 50’s. I wish I’d been “early retired” vs. “mini-retired” when those things hit.
(Oh, and p.s., disability insurance. Get it young so it’s not expensive.)
The great thing is that people are talking about these things now and writing blogs, so we can all learn. I started reading FI blogs about 8 years ago and got very serious about shoveling money into the bank.
This was very hoorah! Article. It got me pumped.
I think about your “its not the same when you are 25,35,45” also just a little different my kids are the metric every year that passes is a year that my children have changed so much. Once they get in school the change becomes exponential.
Right now we are on the early retirement track, but my kids will be so different in 10 yrs that I have planned to take one year off some where in the next 3 years .
I guess now I can call it a mini retirement.
If I didn’t take this year off we might get to FI earlier but I don’t want to make that trade.
I am trying to figure out the side hustle thing. That will help to spend more time with them. Also I really do want to travel. I have most of my extended family living in other countries and I would love to meet them. Being location independent is a goal
Wonderful article, and I definitely agree that finding your niche is the absolute best way to increase your chances of work. Especially in software development, people with PHP and MySQL skills are literally a dime-a-dozen, but finding someone with, for example, significant experience with unstructured database technologies like MarkLogic or MongoDB and the efficient management of terabytes of schema-less information is…shall we say, a little bit less saturated.
This will probably be something that I will do after official retirement – part time consulting work on my own on just that very technology referenced above. I’m fortunate enough to work for a company that offers a niche product, and that is preparing me with the skills necessary to turn this into part time “when I feel like it” income in the future.
Hey Paula,
One of my goals this year is to finally get in the real estate market to start building passive income. I live in SF and unfortunately even the areas where SFO employees live. etc don’t meet your 1% rule. I’ve had realtors tell me that I’m lucky if I can find properties that yield 0.5% of the purchase price as rent-it would still bring in positive cash flow but not quite meet the 1% rule. Do you think I should start looking outside of the Bay Area and not be around to manage the property or would I be okay with going in on properties that yield less than 1%? Side Note: a few multi-unit properties have the potential to yield 1% at market value rents but unfortunately lots of places already have existing tenants and the Bay area has a VERY strong tenants union that would pretty much make it impossible to kick tenants out and raise the rents to market value.
Thank you!
Thanks for this paula. I’ll be giving odesk a try for listing my fledgling services business.
This: “none of us are guaranteed to remain on earth 5 years from today”! Word.
I have taken four mini retirements since the age of 23 and now at 32 I consider myself semi-retired – my lifestyle is funded by location independent freelance income and rental income and savings.
I’m going to be returning to regular work later this year by choice – the banks in my country (New Zealand) just prefer you to have a traditional job before they’ll loan you a mortgage for investment property.
I’ll pretty much work for two years, buy another couple properties and then see how I feel. Hopefully within five years I will nake more contacts that will become clients of my freelance business.
I’ve started to build my own side hustle this year (and blogging about it) and it’s been great so far!
I don’t plan to quit my job over this, but having creative control on a small project does wonders, and I’m slowing building an asset and knowledge over time that are all mine.
I’m a fan of the mini-retirement (aka sabbatical), though I actually do spend that time working! The nice thing about academia is that the same job is waiting for you when you get back and you don’t have to hustle to find a new one.
DH also enjoyed taking a break between jobs after he quit his last job and before starting his current one.
It’s wonderful to regularly live on far less than you earn so that you can live on savings for long periods of time if you need to without freaking out.
Thank you so much!! I am super excited to get started and your advice is invaluable!
Hey,
thank you for the article. I loved the way you broke it down into phases. You made it really easy to follow.
Here is me: I am an adrenaline junkie and my life is about funding the next great adventure.
My approach so far was to work for a while (year, 6 months), save money then do my adrenaline stuff, rinse & repeat. Aka mini retirement I guess.
I was wondering if any of the readers is also like me and if he found a better , more optimised version of adrenaline junkie lifestyle.
Perhaps a well payed job somewhere near a skydiving centre or BASE exit point, a hustle with a nice surf break nearby? Let’s brainstorm as I would love to save me that 6 months or make them into just a couple of months. Maybe just mix the business with pleasure.
Any ideas?
Blue skies, green waves
& dry stones
Michel
@Michel — I’d do both: Create a well-paid, make-your-own-hours digital job that you can work from anywhere on earth (near a nice surf break or a skydiving center), so that you have the flexibility to travel 365 days/year, and then ALSO take a few weeks or months off to just play (mini-retirements).
So far, I prefer the min-retirement (work as needed) option. At 40 I left my job, apt and stuff to work from my laptop and travel. In Goa, India currently. Some of the day is working from cafe’s, some of the day is play.
I think completely retiring could leave something to be desired.
Fun post to read, thanks. My early retirement strategy is a little bit of both, while I am on pace to reach early retirement, I believe we will still want to work in some capacity and will promote mini vacations like you mention, working for 6 months on a project then taking the next 3 months off to visit a country, so I like a little bit of both I suppose;)
Hi Paula,
I read that you and your significant other only buy/own used car, any tips on how not to buy a lemon? Do you guys set a year criteria like, no cars older than 10 years or 15 years? If so, any other criteria? Only Japanese cars or only Ford models?
Do you use a vehicle inspection service before parting with your money? If so, which vehicle inspection service do you recommend? AAA?
Would really appreciate any tips from you. Thanks!
@Silver — Here are a few tips that have helped us:
Hope that helps!
Thank you so much, Paula. Very helpful tips!
But I still hope to find out the oldest cars you guys would buy, if possible. 🙂
@Silver — There’s no particular age limit. The oldest car I ever purchased was 22 years old; I bought it for $400, drove it for about 18 months, and sold it for $200. 🙂 When I was younger and had less money, I shopped in the $2,000-or-less price bracket, which meant I drove cars that were at least 15 years old. Last year, when Will and I bought cars (now that we’re older and money isn’t an issue), he purchased a 7-year-old car and I purchased a 5-year-old car.
Thanks again, Paula. I was reluctant to consider a really nice looking Ford 2000 minivan listed for under $2k, Not anymore, after your 2 replies. But I might likely buy a Jap minivan instead for a bit more.
HI Silver,
I second Paula’s suggestions.
I bought a 1997 Honda Accord with 70k miles on it in 2005. I bought it from a friend who I trusted.
I still drive it, it now has 235k miles on it, and no major issues.
Every few years a part will wear out, in 2013 I needed a water pump, last November it needed a new starter.
So budget for the occasional repair, but yes, they run great and of course it’s way better than making payments.
Only drawback is the 1990’s Hondas are easy to steal, and mine was stolen and missing for a few weeks last August. So, get “The Club”
I got the car back in good shape, minus a stereo and some items in the truck.
@Lars — We discovered (the hard way) that 1990’s Honda’s are easy to steal: http://affordanything.com/2013/06/12/my-boyfriends-car-got-stolen-yesterday/
Unfortunately, the police never found the car. Bummer. But on the upside, the follow-up blog post that I wrote about Paying Cash for a Car turned into one of the most popular articles in the four-year history of this website. So … there’s a silver lining! 🙂
This was a fantastic and very detailed post. This is only the second post I have read here, but I will be back for sure.
I am for sure in pursuit of the lifestyle entrepreneur and what you define as semi-retirement.
Cheers!
Hi Paula,
Great article!
I’m getting a little older now so trying hard to take the ‘early retirement’ route. I’ve been doing a lot of the things you suggest and hoping that someday they will all come together and allow me to quit my ‘normal’ job. I am lucky that my job allows me to have a lot of time off to travel as it is. I work offshore for 1 month and then have 1 month off to do whatever.
I do like the idea of the mini- retirement. I did something like this when i was younger. I would work for a few years and save up my money. Then go back to school til I ran out. That was how I managed to FINALLY get a degree (at almost 50 yrs old).
I have been able to do a lot of the things I REALLY wanted to by doing it that way, but now I’m getting to the point where I want to be able to spend more than a couple of weeks at a time doing the things I really want to be doing.
I’ve done some of the things you suggest, mainly I have some rental properties I bought very cheap. I fixed them up to rent out. I also started a blog (after attending your workshop). I am trying to get started in travel writing and photography and just the other day finally managed to get a couple of my pictures accepted on Bigstock (who-hooo!!).
I am trying to get into a ‘niche’ as a consultant/writer for maritime. I have over 35 years working offshore on all different kinds of vessels, so I’m hoping that will be of interest to SOMEBODY??.
I appreciate all your information and encouragement. My dad always told me, @you can do ANYTHING you want to do, IF you want to do it bad enough” I try to remember that. 🙂
Hi, I just wanted to thank you for this website. We are waiting to hear back from our mortgage lender about a per-approval amount (this afternoon hopefully!), and we plan to buy a house that, in a year or two, we can then turn into a rental. Without reading about your rental homes and income, I think I would be much more scared than I actually am (and less confident than I am) about this working out. We’re still pretty new, and the learning curve will be huge, but it’s a start in the right direction. Thank you!
That’s fantastic!! I’m so happy for you!
I love that you’re on the road to buying your first rental. Investing in real estate is probably the single smartest move I’ve ever made, from a financial freedom point-of-view. It was absolutely instrumental in helping me create freedom and flexibility. The cash flow is great; rising equity is just icing on the cake!
I just updated an older article about evaluating rental properties, based on some questions that I received from readers. You’ve probably already read it, but I’d encourage a re-read before you pull the trigger. http://affordanything.com/2012/01/25/income-property/
Congratulations again!! Keep me posted on how it goes! 🙂
This retirement debate is growing among my friends. After passing of a good friend this past January it emphasizes that life is indeed short. Work like crazy now to retire early or work more leisurely and retire later. The key is living in moment with an eye in the future.
The difference between the three retirements is what your ready to handle financially and spiritually. Many people have the money to quit today, but cant because of fear. Too much time on their hands scares them for some reason. I feel differently as I will tackle all three retirements in the near future. Mainly because I want to ease into, and experience retirement in stages.
Oh how I love this article. Mini-retirements are really possible. My husband and I started taking multiple vacations during the year (with our 4 kids) as well as adding a 3 week vacation in the mix. We are hoping to move to the next step of a mini-retirement in 3 years. Which means backing off the multiple trips for awhile. However, this fever has bubbled onto our kids as my oldest daughter is saving for her 2 month travel before settling into a full-time job journey. My oldest son is also hopping along. After 2 mini-retirements over the next 5 years, we hope to try living someplace totally new for a 2 year stint. Articles like these motivate me to be adventurous and realize that we only ever get one life – who wants to wait til they are 65 or older to live it 😀
Hi Paula,
Great article! You have a wonderful writing style, a playful, rebellious attitude and very actionable advice. Plus you’re sharing the nuts and bolts of what you’ve actually done. I especially like how you take people from Ground Zero and show them a map that leads toward financial freedom.
I’ve worked for myself since 1991 and achieved early retirement in 2009 at age 52. Freelance writing, business ownership and self education gave me the skills to purchase and operate the mobile home parks that provide the 95% passive income that fund my retirement now. I just manage my managers, mostly by email and phone. Had I known earlier what I know now, I could’ve retired at age 22, 32 or 42.
Time is far more valuable than money and the older you get, the more you realize this. The conventional wisdom of spending 4 years in college and 40 years working and saving, is a massively ineffective use of our limited time.
I love your rental property stories. And I’d like to suggest that you can put this plan on steroids by just buying larger properties. I’m sure you see this with your triplex.
I bought our first 32-unit mobile home park with just $1,000 down back in 2003. The bank provided 70% of the money and the seller carried a second mortgage for the remaining 30%. After all park bills and mortgages and even a manager to run it, the park generated $3,000 a month profit. So in effect, we got the park for free. Yes, like you recommend, the park was a fixer-upper. We reinvested all profits there for 4 years before drawing any money out. We lived off the income from another business we’d started.
Now my tenants — just by paying fair market rents — pay all park bills, the mortgage (now down to one) a manager to run it and all my personal bills plus more. Rent increases and expense savings have since tripled the park’s value and it now brings in over $8,000 a month profit. We bought a second park in 2009 and are buying a third right now. Monthly, passive cash flow is what rentals provide. Passive cash flow provides time, freedom and early retirement.
Trailer parks are far less expensive per dwelling (or lot) so you can buy many more units at once, multiplying your income. Of course you treat your tenants with respect and make repairs with a sense of urgency so you are giving the customer service you’d be proud of if you were running any other business. As you evolve, you learn to buy parks that are lot rental only so you don’t own any dwellings. This eliminates most repair expenses and most tenant turnover.
With a few months of self education, it truly is possible to learn how to just BUY the passive income stream everyone else says you have to save 40 years to attain. It’s the ultimate “life hack.” It’s a shortcut that can save 4 decades!
Yes, you have to expand your brain and your comfort zone. You have to get comfortable with carrying debt. You have to learn that with REAL inflation running nearly 10% a year (ShadowStats.com) and typical stock gains running 3% or less, that saving and investing is a purchasing power loser for most people. Daniel Amerman does a great job of proving this at DanielAmerman.com.
In fact, Amerman proves that the only real way left to overcome high inflation, low investment returns and unfair taxes is to buy income property with borrowed money.
But like you say, income property overseen by a manager frees you from a schedule and allows you to live the life you imagine. It also provides the best income security on the planet because it provides fresh, new income every month. This means you don’t have to worry about outliving your savings or worrying about the stock market crashing. You can literally pay your bills forever without having to work a schedule again. This gives you control and it gives you freedom.
Digits and dollars on paper are only the promise of value until you cash them in. With the dollar losing so much purchasing power every day, the longer you wait, the more purchasing power you lose. Income-producing real estate is something real that you can control and touch and massage to overcome the forces making your purchasing power melt.
Of all the jobs, businesses, investments and side hustles I’ve ever tried, income property is by far the fastest, easiest and most lucrative. Buying one large enough property truly can provide early retirement right now.
Good luck to all!
MJ
@MJ — Congratulations on achieving financial freedom! Mobile home parks are a fantastic way to build a stream of passive income. In fact, once you jump into the “passive income” stream, the more you start spotting a multitude of opportunities.
I particularly loved this paragraph: “Income property overseen by a manager frees you from a schedule and allows you to live the life you imagine. It also provides the best income security on the planet because it provides fresh, new income every month. This means you don’t have to worry about outliving your savings or worrying about the stock market crashing. You can literally pay your bills forever without having to work a schedule again. This gives you control and it gives you freedom.”
The best hack for living well in a big coastal city is being the resident manager for a 20-30 unit apartment building. 1) it isn’t a lot of work. 2) it provides free rent. 3) it lets you develop amazing landlord skills on someone else’s dime.
I love this guy! Great article. I’m relatively new to the ‘semi – retirement’ thing. I’m 35, married no kids and two dogs. It’s been a little over a year since leaving work to travel overseas on a spiritual journey which was just fantastic. Words can’t describe and we look forward to our next trip (next month! ) I was a full time worker (with a second job mind you..) for 12 years but invested heavily into real estate in order to ‘retire’ as early as I could. I got a little lucky and made some capital gains, but then the market starting tanking and has still not yet recovered so at the time I said ‘F it!’ and quit my horrible job I couldn’t take any longer. The gains from those properties paid off alot of our mortgage and we had money saved so could take at least a few months off. After we returned from the trip the Wife had to do what she’s always done and go get a job and I still didn’t know what to do so I started to mow lawns. Funnily enough I enjoy gardening so that’s just what I did. Fast forward to today, my Wife no longer has to work and I work 2-3 mornings a week making more than I used to full time! And love it. I find I get bored and restless easily and enjoy the balance I have from my own work. So, this is how I semi – retired and my Wife retired early. We still have our home that’s valued at 3/4 of a million dollars and one rental property with loan, two Superannuation funds and possibly even inheritance’ (but i never count those for obvious reasons) which will see our wealth climb into the future that we’ll one day use to fully retire.
Man life is good when you have time and are not in fear of money so much! It’s all I knew it would be all those years ago.
My biology background led me to the term “punctuated employment” vs mini-retirement. A little more dynamic, for those of us who are always doing something, and forward-thinking, because mini-retirements are simply lulls until the next project.
I found you through your new podcast with J. Money. Better late than never, right?!
“punctuated employment” — I like that!!
Thanks for finding me, Erin! Welcome! 🙂
Hi great article. I’m so jealous that you have all these choices open to you. I have been a teacher for 35 years. In 2016 I had a major health scare due to work related stress and it is only now in my 50’s that I have decided to look at other options to fund my early retirement. Since I am a qualified English teacher I am investigating starting a blog and doing Skype tutoring. I have already travelled extensively but only during school vacations. So to all those of you who are considering mini retirement I say go for it. Often age and poor health prevents you from living your life the way you want to.
I’ve read quite a few of your posts (especially your real estate systems stuff). But this might be the best post I’ve read here. It’s a great system for thinking about different work/life balance options.
We’re strongly on the Early Retirement approach (saving ~70% income) and by the normal 4% rule for stocks we’d be there in about 7 years. But we first started looking at real estate and acquired a 3-flat (we live in one unit). At $200/mo/unit cash flow, that gets us to about six years til FI. We have sufficient cash saved that we could do buy a few more similar 3-flats to get our FI down to 2.5 years or so, but I realized that I could buy small companies that need some work at much better valuations than local real estate. (Plus, I’m “handier” with businesses and tech than real estate). We bought our first small web company. If we grow that to generate just ~600/mo, that gets us down to 5 years. Now I’m looking for a larger business that could bring us to full semi-retirement (now that I have a word for it). If this buying/selling businesses becomes a “thing”, it’ll be a hybrid of semi-retirement (steady state) and mini-retirements (when buying/selling a business). But now I have a conceptual framework to think of.
So very insightful! Thanks!