What are you willing to give up in order to work less (or not at all)? Do you carry debt that isn’t really necessary?<\/p>\n\n\n\n
In Early Retirement Extreme<\/em>, Jacob Lund Fisker shows you how to do what he did: break free of consumerism and live a fulfilling, meaningful life\u2014well before the typical retirement age. He provides straightforward strategies that you can adopt to make this significant lifestyle change.<\/p>\n\n\n\n Continue reading for an overview of this book that invites you to take control of your life<\/a> and future.<\/p>\n\n\n\n\n\n\n\n The modern world lures us into giving away our freedom. The vast majority of adults are caught in an unfulfilling cycle of consumerism: They sell decades of their lives to employers so they can buy consumable goods and status symbols that don\u2019t make them happy. In doing so, they deprive themselves of time they could be spending on the pursuits and people they care about.<\/p>\n\n\n\n In Early Retirement Extreme<\/em><\/a>, <\/em>Jacob Lund Fisker (a retired astrophysicist) argues that it\u2019s possible to break out of this system through a combination of frugal living, skill-building, and smart financial management.<\/strong> With these strategies, Fisker built a life for himself that allows him to survive on just $7,000 a year. After saving 75% of his income for just five years of salaried work, he permanently retired at age 33. In 2007, Fisker began sharing his frugal living advice on his blog, Early Retirement Extreme<\/em><\/a>, eventually collecting, organizing, and adding to his blog material in the 2010 book of the same name.<\/p>\n\n\n\n We\u2019ll detail Fisker\u2019s view of modern consumer culture, outlining his argument that you should abandon this mainstream lifestyle. Next, we\u2019ll explain how to follow in Fisker\u2019s footsteps by retiring at an extremely early age: First, we\u2019ll offer tips on how to minimize your living expenses; then, we\u2019ll explain how to increase your financial security by diversifying your skills; and finally, we\u2019ll discuss how to invest your savings and become financially self-sufficient for life.<\/p>\n\n\n\n Fisker argues that the dominant cultural narrative of the modern age influences people to work far more than they need to survive<\/strong>. The average worker believes that the ideal life<\/a> is to be as busy and productive as possible, earn as much money as they can, and then spend that money on consumer goods. For this reason, as their income increases, they increase their spending<\/em> in lockstep rather than saving<\/em> their money and buying back their time by retiring. They don\u2019t question this narrative and end up living unfulfilling lives.<\/p>\n\n\n\n Is life as a habitual consumer really so unfulfilling? Fisker says it is, offering three reasons to break out of the cycle of consumerism.<\/p>\n\n\n\n Many people falsely assume that you can find happiness by spending money, asserts Fisker. Because the dominant cultural narrative defines \u201csuccessful\u201d people as those who earn and spend the most money, people who want to feel successful spend excessively on status symbols with little intrinsic value.<\/strong><\/p>\n\n\n\n Others seek fulfillment in the intrinsic pleasure of accumulating possessions.<\/strong> They enjoy building collections of items that are personally meaningful to them, like antique toys or designer handbags.<\/p>\n\n\n\n Fisker argues that both of these spending habits position spending money<\/em> as your life\u2019s source of meaning, and consequently, they lock you into a cycle where you feel you always need to spend more to be happy.<\/strong> Spending money becomes a compulsion, something you feel you must do rather than something you want to do.<\/p>\n\n\n\n According to Fisker, people in consumer culture are unskilled<\/em> because they\u2019ve internalized the habit of solving their problems by spending money<\/strong>. They deprive themselves of the opportunity to grow through solving their own problems; consequently, they become dependent on the products they buy.<\/p>\n\n\n\n When you believe you need to buy a certain product or service to survive, Fisker argues that this limits your freedom by creating the illusion of a greater cost of living.<\/strong> You believe you need to work more to afford all your expenses, so you spend all your time working rather than pursuing more fulfilling activities.<\/p>\n\n\n\n Debt is one of the most limiting constraints possible on your time and freedom, says Fisker. Going into debt means selling your future time and labor to buy something now. Additionally, you\u2019ve committed to selling more<\/em> of your time to pay interest on that loan.<\/strong> The deeper in debt you are, the more time you must waste working to pay interest and the less time you\u2019ll have to live your life the way you want to. Despite this, it\u2019s common practice in modern culture to live perpetually in debt.<\/p>\n\n\n\n Fisker argues that it\u2019s almost always entirely unnecessary\u2014and against your best interests\u2014to take on debt of any kind. This means only purchasing something when you can afford it instead of racking up credit card debt<\/a>.<\/strong> It also means forgoing auto loans, expensive mortgages, and student loan debt.<\/p>\n\n\n\n Fisker explains that you\u2019ve escaped the cycle of consumerism when you\u2019re no longer buying things that won\u2019t make you happy. Once you\u2019ve done this, it\u2019s possible to buy yourself an early retirement and work only as much as you want to.<\/p>\n\n\n\n People differ in how much they want to work. Many choose to pursue total financial freedom as quickly as possible, saving up enough money to never have to work again\u2014a lifestyle that Fisker argues is more attainable than most people believe.<\/strong><\/p>\n\n\n\n Alternatively, some people may not feel the need to immediately swear off work for the rest of their lives. In this case, Fisker notes that you can save enough so you can partially retire, only needing to work a few hours every week. Another option is to save enough to buy back your freedom in the short term\u2014a mini-retirement<\/a>, you might say.<\/p>\n\n\n\n To survive off of such a low income and retire early, Fisker argues you must learn to do three things: minimize your expenses, diversify your skills, and invest your savings.<\/p>\n\n\n\n According to Fisker, most people can do without many things they think they \u201cneed.\u201d As you lower your annual expenses, the time it takes to save for retirement drops rapidly.<\/strong> Lowering your expenses not only leaves you with more income to save\u2014it also means you\u2019ll be free of that expense every year you\u2019re retired, so you don\u2019t have to save as much before retiring.<\/p>\n\n\n\n Here are Fisker\u2019s three tips on how to minimize your cost of living.<\/p>\n\n\n\n As mentioned earlier, minimizing your living expenses means refraining from taking on debt of any kind, including auto loans, mortgages, and student loans. Now, let\u2019s discuss how to do this.<\/p>\n\n\n\n If you need to buy a car, Fisker recommends saving up and paying for it in cash to avoid taking on debt. That said, he says it\u2019s better not to own a car at all, if possible<\/strong>, as it\u2019s one of the biggest expenses<\/a> the average person has. On top of the cost of the car itself, fuel, maintenance, and insurance costs can add up and significantly delay your retirement.<\/p>\n\n\n\n The best way to avoid owning a car is to plan ahead when choosing where to live. As long as you live close enough to walk, run, or cycle to your workplace and a grocery store, you can live without a car.<\/strong> Additionally, walking, running, or cycling every day is a great source of exercise, improving your overall health<\/a> and helping avoid unnecessary health care costs.<\/p>\n\n\n\n Many adults believe that the most responsible housing decision they can make is to invest in real estate by taking out a mortgage and purchasing a \u201cstarter home.\u201d Fisker disagrees, arguing that although you gain equity as you pay off your mortgage, this addition to your net worth is more or less counterbalanced by the interest you have to pay. For this reason, purchasing a home with a mortgage is no safer than investing the principal of any other loan.<\/strong> Although it\u2019s possible to make money as your house appreciates in value, it\u2019s always possible for the housing market to decline.<\/p>\n\n\n\n Because real estate is an uncertain investment, Fisker argues that renting a place to live can be more economical than buying a home<\/strong>. Sometimes, you can make more money<\/a> by taking what you would spend on a mortgage and investing it elsewhere. Whether it\u2019s more profitable to rent or buy depends on the strength of the real estate market<\/a> relative to other investment markets. Instead of worrying about the value of your home as an investment, Fisker recommends viewing it as just another living expense.<\/p>\n\n\n\n If you do want to own a home, Fisker suggests saving up and paying for it in cash to avoid paying mortgage interest entirely. This is especially possible if you choose to buy a small home\u2014Fisker argues that most people buy houses that are too large and expensive<\/strong>, which serve as mere status symbols and places to hold unneeded possessions. By living somewhere smaller, you can massively reduce your annual expenses, regardless of whether you rent or buy.<\/p>\n\n\n\n Fisker acknowledges that college degrees have some value, but he claims that much of the time they\u2019re not worth the investment.<\/strong> You need a college degree to gain access to a number of white-collar jobs; however, skill-based jobs like elevator mechanic or cable installer often pay just as well and allow you to start saving immediately rather than paying off debt.<\/p>\n\n\n\n In regard to the college education itself, Fisker argues that most college programs won\u2019t add much value to your life.<\/strong> He claims that most students in higher education are looking for the credentials necessary for a white-collar job and nothing more. Colleges looking to attract students have changed to cater to these desires, offering increasingly easy, entertaining classes with little true educational value.<\/p>\n\n\n\n To reduce your living expenses, buy less stuff, says Fisker. This, however, is easier said than done. How do you keep yourself from buying things you don\u2019t need?<\/p>\n\n\n\n One tactic Fisker recommends is to cut out impulse buying entirely with a \u201cwish list.\u201d<\/strong> Whenever you feel the urge to buy something, add it to a list and move on with your day. Only allow yourself to buy something after it\u2019s been on the list for 30 days. This way, you have time to adjust to life without that item, and you may discover that you don\u2019t want or need it as much as you thought.<\/p>\n\n\n\n Another money-saving tactic Fisker suggests is to stretch your ability to deprive yourself.<\/strong> Choose one major expense in your life and cut back to an extent that feels extreme for a set period of time. Afterward, you\u2019ll feel comfortable spending much less than you used to on that expense\u2014and the new normal will feel indulgent in comparison to the extreme deprivation you put yourself through.<\/p>\n\n\n\n Fisker recommends reducing your living expenses by maximizing<\/a> the value of every purchase. <\/strong>Many products produced nowadays are built cheaply so consumers can use them up, throw them away, and buy new ones, as this is the financial model that\u2019s most profitable for the companies selling them. To avoid falling into this trap, buy quality products that last. <\/strong>Even if they\u2019re a bit more expensive, it\u2019s cost-effective in the long run if you get many years of use.<\/p>\n\n\n\n Another way to escape the cycle of purchase and disposal is to look for opportunities to buy things used or pick them up for free<\/strong>\u2014these opportunities are everywhere on online marketplaces. Likewise, Fisker recommends selling your possessions when you\u2019re done with them.<\/p>\n\n\n\n According to Fisker, diversifying your skills is a key component of the early retirement lifestyle.<\/strong> Most people strive to be highly valued in the labor market by specializing in a single area of expertise. However, if you cover your entire cost of living with the income from a single skill, you\u2019ll be especially vulnerable if that income is disrupted.<\/p>\n\n\n\n Rather than creating a life for yourself that depends on you profiting from a single specialty, Fisker recommends building a diverse set of skills<\/a>. This way, you\u2019ll have the skills necessary to get a job in a wide variety of fields, if necessary, making you resilient to disruptions to any one industry.<\/p>\n\n\n\n In addition to diverse work<\/em> skills, Fisker recommends mastering the daily living<\/em> skills necessary to fix household problems rather than spending money to have others do so (or on products that do it for you). This helps you further minimize your expenses, making retirement a viable option sooner.<\/p>\n\n\n\n Here are Fisker\u2019s tips on how to build a diverse, resilient skillset.<\/p>\n\n\n\nOverview of Early Retirement Extreme<\/em> by Jacob Lund Fisker<\/h2>\n\n\n\n
The Problem: The Cycle of Consumerism<\/strong><\/h3>\n\n\n\n
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Reason #1: Your Purchases Don\u2019t Make You Happy<\/strong><\/h4>\n\n\n\n
Reason #2: Habitual Spending Keeps You Unskilled and Dependent<\/strong><\/h4>\n\n\n\n
Reason #3: Paying Off Debt Wastes Precious Time<\/strong><\/h4>\n\n\n\n
The Goal: Buy an Early Retirement<\/strong><\/h3>\n\n\n\n
Tips for Minimizing Expenses<\/strong><\/h3>\n\n\n\n
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Tip #1: Avoid Unnecessary Debt<\/strong><\/h4>\n\n\n\n
You Don\u2019t Need Auto Loans<\/h5>\n\n\n\n
You Don\u2019t Need a Mortgage<\/h5>\n\n\n\n
You Don\u2019t Need Student Loans<\/h5>\n\n\n\n
Tip #2: Don\u2019t Buy Things You Don\u2019t Need<\/strong><\/h4>\n\n\n\n
Tip #3: Maximize the Value of Every Purchase<\/strong><\/h4>\n\n\n\n
Tips for Diversifying Your Skills<\/strong><\/h3>\n\n\n\n
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Tip #1: Learn by Doing<\/strong><\/h4>\n\n\n\n