Do not seek illumination unless you seek it as a man whose hair is on fire seeks a pond.” — Sri Ramakrishna

I really like this quote. It provides a visual image of a very important point. The point is that you must be passionate to succeed. Being passionate centers every action and every choice around a specific goal to the exclusion of other considerations. After over 30 years of trying to understand my fellow human beings I have found that they are mostly not incompetent when it comes to making decisions, rather they are just passionate about other things even though they say or think they aren’t.

If you are passionate about retiring early, all your choices must center around early retirement. The more focused you are, the earlier you will escape the need to have a job.

Economically speaking, early retirement is about being financially independent. We live in a cash economy, thus if you can generate sufficient cash flow to pay for your living expenses without working, you are by definition financially independent [of your job] and you can stop working.

Like physical fitness, personal finance is not rocket science. The specific knowledge is very simple. The challenge is in showing up and keeping with the program. It is thus a motivational problem and many people are prepared to pay a personal trainer not for the trainer’s knowledge on exercise but because they feel guilty if they did not show up.

However, if you are already passionate, you have already taken the biggest step. Give me a person who is $50000 in debt but is passionate about personal finances and I bet she will come out better than the person who is not in debt and is just going through the motions and putting 10% into a retirement plan.

The next step is to go from ordinary to extraordinary. Obviously if you want extraordinary results like retiring 5 years from now or becoming an elite athlete, you can’t get there by adopting ordinary methods. Instead you have to proceed to the next level. There are less people at this level, thus these sources of information will be much harder to find.

For instance, yesterday DW was looking at some new boots in some catalogue. I suggested that instead of buying a fashionable $50 pair that would self-destruct in about year to find someone who made really good boots and buy a high quality classic pair that lasts 10 years. However, she did not know where to get this and neither did I. I can however tell you where to get men’s footwear that just might outlive you. For men’s shoes try Allen Edmonds or Church. This is just one example.

These ideas might be found outside the early retirement community. After all, when most people speak of early retirement for mortals e.g. not IPO millionaires, they mean before age 60, not before 40 or at 30. I recommend being eclectic and open minded when it comes to money saving and money making ideas and be prepared to drop your preconceptions.

If the focus is early retirement, any idea that works is good. For instance, in trying to reduce my economic liabilities also known as “stuff”, my source of ideas to reduce clutter was originally based on suggestions from the ecological footprint community, then from the anti-consumer and voluntary simplicity movements. Later again I adopted ideas from the boating industry where space is at a premium. Japanese architecture is another good source for space saving designs. Conversely, TV-Shop is not.

To retire early, the following equation must hold
25*income generating assets > regular expenses

There are two conclusions from this.

  1. For every decision, consider whether your choice increases income generating assets or decreases regular expenditure. If it works against these goals, it works against your early retirement goal.
  2. If you figure out a way to not spend $1, you just saved $25. A penny saved is not just a penny earned. It’s a quarter (25c) earned!

When you are passionate about early retirement, this way of thinking will become second nature to you.

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Originally posted 2007-12-16 16:34:00.