In my first post, I told a story about the Partners in my consulting firm. These people earned lots of money, yet they still worked well into old age. This wasn’t because they enjoyed the work, it was because their spending habits prevented them from retiring.
The majority of people live their lives like this. They believe that life is about working hard and earning as much money as possible. But because you’re working so hard, you deserve to treat yourself. Why shouldn’t you buy the nicest house on the block, the flashiest new car, or regularly eat at nice restaurants?
According to this common perspective, the role of work is earn money, and the role of money is to buy things that make you happy.
I’ll admit, even I held that view for quite a few years. It felt right to treat myself to nice things as a reward for working 80 hour weeks in a claustrophobic office. But I realised that, despite buying things I thought would make me happy, I wasn’t any happier.
Slowly but surely, I changed my perspective on the role that money plays in my life. I realised that money was a tool that I could use to unlock things that were important to me. That is, time to spend with people I care about and the freedom to focus on what fulfils me.
After this realisation, I had a bunch of questions: How do I manage money differently in order to unlock those important things? Will I ever be able to retire early? What sacrifices will I need to make? Am I being crazy?
And I’m sure you have similar questions, so let’s take a look at the very simple mathematics behind early retirement.
In my very first article I told a story about partners at my consulting firm that worked well into old age. They earned lots of money but didn’t seem that happy.
These partners worked long hours to climb the corporate ladder. And they spend their high incomes on big houses, nice cars, and fancy restaurants.
I had a hunch that this wasn’t the correct path to a happy and fulfilling life. But I didn’t have any proof. So I dived head first into the scientific research on happiness to figure out how we should spend our money.
What I found amazed me in it’s simplicity. All the happiness research pointed to one thing: we should spend our money on building close and loving relationships.
And I realised that being mindful with how we spend money allows us to build those close relationships and, at the same time, helps us reach early retirement faster.
I’ve always claimed that I started Ordinary Dollar to build a blueprint to early retirement and show that anybody (even an ordinary person) can achieve it.
An important part of this blueprint is being transparent about my own finances. And now it’s time to put my money where my mouth (or my typing fingers) are. Honestly, I’ve been hesitant to hit publish on this blog post — but here goes!
In this post you will find an outline of my income sources, a breakdown of my expenses, and a snapshot of my total wealth.
Unfortunately, not all goes to plan. This month I spent more than I saved. Not exactly great for a blogger than claims he can help people reach early retirement!
Actually, there’s a good reason why I spent so much money this month. And it turned out to be a very interesting lesson: although I spent more than I earned, my net worth still grew in July. What!?
Want to learn how I grew my wealth despite saving nothing this month? Read on…