If you play your cards right, you can retire early! Sounds good, right? As much as I love to daydream about my future, I need to make sure I am enjoying the present too. For some this means spending a bunch of money they don’t have on things they don’t need. This can cause issues down the road when you do not have the money to get yourself out of debt. By the time you are finally paying off your debt, you probably don’t even remember what you spent your money on and lost a great amount of interest in the process. It is sad, but very often true. I do not believe we need to spend our money on things we don’t need just to be happy. I do believe we need to enjoy the present, but do so in a way where we are being responsible.
I often catch myself day dreaming about fancy cars and John Deere tractors. Although I’d love to have these things, I know it would set me back further in my plan to pay off my mortgage. For example, if I went out and bought an Audi A5, I’d need to pay back the $50K or so for principal and another couple of thousand dollars in interest. This money can be more effectively used towards paying off my house. I already have an nice vehicle with no payment that I can use. After I pay off my mortgage in 2022, I can evaluate if a new vehicle is possible. The longer I stay debt free, save, and invest, the quicker retirement should come. Careful management of my funds is key to me getting the opportunity to retire sooner rather than later. It does not mean I need to, but gives me the option to take it easier.
I will also need to save up for my children(s) college tuition, which is not cheap. I mentioned this in my post titled, Planning for your children’s schooling (university). Tuition is only getting more pricey by the day, so I am expected to pay between $200k to $500k by the time my son is 18. Since I want to pay cash, I need to make sure I am planning for this well in advance. Everything comes back to saving and saving early enough for your planned expenditures.
One of the big mistakes I see people make is saying the small stuff does not matter. I feel the small stuff matters the most because it is an area where you can make big gains over long periods of time. $10 a day extra wasted turns into $3,560 in a year and $35,600 in ten years. Imagine finding a few of these opportunities and multiplying it several times. It all adds up and all means something. For the people who are not super stars (like myself), I thrive on small gains. The small gains are where I can be successful too.