How To Retire Before 99% of People (Starting With $0)

It’s simple. If you want to retire before everyone else, then you need to follow these three steps. Firstly, calculate the real numbers. Secondly, manage the variables, and thirdly, execute your plan successfully. It’s really that straightforward, but most people don’t even get past step one. To be honest, 30% of people have probably clicked off this article, probably because retirement sounds too old school for them. However, you might not actually want to retire early. I’ll explain why towards the end. Well, that’s for the few of you that make it that far.

Step one: Calculate the real numbers

Step one: Calculate the real numbers. How much do I need to retire? This is one of the most searched questions on the internet, and no one seems to be able to give the real answer. It’s no surprise that lots of people are turning to the internet, as the school system has left us in the dark. They’re only interested in pushing us into the workforce so that society can exploit us for our time and labor. If most people actually knew the answer to how much they need to retire, then there’d probably be an up roar. That’s because millennials and Gen Zs are reportedly going to have to work longer than any other generation. The sad truth is many people are deluded. Some think they’ll enjoy round-the-world cruises on the back of saving $50 a month. Others believe they’ll need so much money that quitting work is an unrealistic fantasy. Most people are hurtling towards a harsh reality check without even knowing it. It’s not their fault as they’ve been set up to fail. Retirement was much more achievable in my day. However, that’s why it’s so important to calculate the real numbers now so you’re at an advantage. This is kind of like the first step of any road trip, setting a destination on your navigation system. Without it, how are you going to head in the right direction?

The Rule of 300

Right, I’m going to cut through all the confusion online. You just need to focus on the rule of 300. This rule is so powerful that it allows you to jump forward in time and calculate how much money future you will need to quit your job and still pay the bills. It’s simple, all you have to do is add up your monthly expenses and multiply them by 300. This means if you currently spend $1,000 per month, then you’ll need $300,000 saved. If you spend $1,500 a month, this will mean you need $450,000 in your account. If you spend $3,000 a month, you require $900,000 and so on. You get the idea.

The Power of Compound Interest

Now, I know what you’re thinking, how much? But let’s say you do need $900,000. You don’t have to save all of that. I’ll reveal later how you can use the power of compound interest and only have to save around $110,000. The rule of 300 is based on the ability to safely withdraw 4% per year from your savings. The idea is that if you put your money in the correct places, then it will grow by more than 4% per year, allowing you to take from your pot without it running out. It’s a bit like Hermione’s magic bag in Harry Potter. I know this sounds great, but it’s very important this is just a rule of thumb and not scientific law like gravity. I mean, it’s pretty impossible to accurately predict the future as there are so many different factors that we can’t take into account. If anyone tells you otherwise, then they’re trying to sell you something. So, yes, stock market conditions and inflation could have an impact on your final freedom figure. However, I still think it’s a good idea to use the rule of 300 as a guide and adapt it as you go.

Step two: Manage the variables

Now you’ve figured out your destination, you can start increasing your odds in getting there, which brings me on to:

Step two: Manage the variables. Just as you need to use the steering wheel, brakes, and accelerator in a car to navigate the roads, you need to use these five variables to achieve your retirement goal.

Variable 1: Income

Variable one is, of course, income. I highly suggest that you increase your income as soon as possible. This is your accelerator, and if you’re making more than the average, you’ll be able to retire before most people. In my late teens, I had an income problem. After leaving school at 16, I just wasn’t making enough money to pay my rent and go out with my friends, let alone save for retirement. So, I devised a plan to get a pay rise. You see, I was working part-time in a radio-controlled model shop earning next to nothing. I thought to myself, “How can I get the owner to pay me more for the same work?” For the next couple of weeks, I worked my socks off and I kept track of all the sales I made. I remember writing down every detail in a little notepad. When I got a chance, I sat down and I looked at all my notes and compared them with what the shop had sold in that period. One thing became very obvious: I was making all the radio-controlled helicopter sales because of my expertise in flying them. That’s when it hit me. I was valuable to my boss because without me, he couldn’t sell any helicopters. Now I had this information, I felt confident I could approach him and ask for a raise. I clearly explained my value to the business and asked for the increase in pay I wanted. I remember him staring at me blankly for a couple of seconds. I thought I’d offended him until he let out a little grunt and a nod of his head, agreeing to pay me exactly what I’d asked for. Although this was a long time ago, the principle remains the same now. If you want to increase your income, then you need some kind of leverage. To have this, you need to become valuable. Maybe you could learn some high-income skills such as sales and marketing, or, alternatively, start some kind of side hustle.

Variable 2: Expenses

However, it actually doesn’t matter how much you earn, it’s all about how much you save, and that brings me on to:

Variable two: expenses. Even if you were accelerating at full speed in a Formula 1 car, if you had a massive parachute attached to your rear wing, then you aren’t going anywhere fast. This is exactly what it’s like having a good income with too many expenses. Look, I’m not one of those online people that’s going to tell you to stop buying Starbucks and enjoying life. I think that’s a pretty sad way to live if you like those things. This variable is more about cutting out the things you couldn’t care less for. This is actually the perfect time to come back to the rule of 300. Let’s say you spend $15 per month on Netflix. If we multiply that by 300, you’ll see that you actually need $4,500 saved in your retirement pot to keep watching indefinitely. Well, this is assuming the price doesn’t go up, which it most certainly will. Most people have little monthly expenses that they don’t really care about, as they seem so small. But if you apply them to the rule of 300, then those small expenses actually add up very quickly.

As well as cutting out little expenses, I also highly suggest being smart about the larger ones. I’m talking about rent, mortgages, and car payments. These are the biggest silent wealth killers, as they’re a huge drain on your finances every single month. But there are a few ways to get around it. The first is known as house hacking. This is when you buy a house and rent out part of it to a roommate in order to cover the mortgage. In America, you can also buy something called a duplex, which is two separate living accommodations in one house, allowing you to live in one side of the house and rent out the other. The next is rent hacking. This is simply renting out a house and then subletting individual rooms to different people to cover all of your costs. But before you start doing this, make sure to clear it with your landlord. The third is car hacking. This is when you buy a car that has lost most of its value already. Drive it around for a couple of years and then sell it for almost what you paid for it and repeat the process. If you successfully manage to drive down your expenses and still live a great life, then you can start thinking about:

Variable 3: Debt

Variable three: debt. A lot of people aren’t going to like this one, but you need to master debt. Some people are totally against it, while others are way too reckless. I’ve always been somewhere in between the two extremes. It’s kind of like the fuel in your car. It can be very useful, but it can also explode if you’re not careful. Managing debt is crucial for retirement planning, because carrying too much bad debt can eat away at your savings and make it difficult to achieve your retirement goal. On the other hand, using good debt strategically can help you build wealth and increase your income, which can lead to an earlier retirement. It’s important to understand the difference between the two and make smart decisions about when and how to use debt. Put simply, good debt is when you borrow money to buy things that will make more money in the future, like buying a house to rent it out. Bad debt is when you borrow money to buy things you don’t make any money on, like using a credit card to buy clothes, expensive holidays, or a car that you don’t need. But here’s the real kicker: in order to get good debt, you need to have a good credit score. And the best way to do this is to actually own a credit card. You can put little expenses on it and pay it off in full at the end of each month. This will mean you never pay any interest and build a good score for the future. But like I said, the only reason to have good debt is to buy assets, which brings me on to:

Variable 4: Investing

Variable four: investing. Investing is important for retirement because it can allow your money to grow faster than it would if you simply just saved it. It’s kind of like the boost pad you go over when playing Mario Kart. With the right investments, your money can grow at more than 4% per year, which is the amount you can safely withdraw from your savings if you’re using the rule of 300. I’m not a financial advisor, however, I’ve always invested consistently into the S&P 500, which is an index fund that includes the top publicly traded companies in the USA, which has historically averaged a return of 8% per year. I mean, if you were to invest $200 per month for 45 years, which equates to $108,000, at an average return of 8% per year, then you would have a total of $1,054,907. That’s the power of compound interest. But where can you start investing? Well, it’s a lot easier than it was back in my day, as you can do it all from your phone. There are various different apps. I’ll leave some of the links down below.

Variable 5: Tax

Variable five: tax. The more money you earn, the more money the government will try to take off you. This is why you really need to use the tax loopholes to your advantage. This is kind of like your fuel tank leaking. If you don’t plug the holes, then you’ll have nothing left. By using tax-advantaged accounts such as Roth IRAs and 401(k)s in the USA, and ISAs in the UK, you can reduce the amount of taxes you owe on your income and investments. These accounts allow you to invest and avoid paying tax on the money you make, but the amount you can put into these accounts is limited every year, so I strongly suggest that you fill these up as soon as possible.

Step three: Execute your plan

And now you’re ready for:

Step three: Execute your plan. Just like you need to adjust your driving style based on the road conditions and traffic, you need to adjust your approach to managing the variables in order to execute your plan successfully. Put simply, the following techniques will help you become a better driver.

Develop an ROI Obsession

Firstly, develop an ROI obsession. When I was growing my wealth, I was hyper-focused on making sure that everything I bought at least made me back the money I spent on it. A good example of this nowadays is the MacBook Pro. It’s a great tool that can allow you to make far more money back than you spend on it. However, if you just play games on it, then you’ll have to save all that money up again the hard way. Think about how you can use everything to make you more money. That way, you’ll never have to start from zero more than once.

Measure Your Progress

Secondly, measure your progress. Make a habit of setting clear money targets every month. I remember not only doing this, but also sharing them with one of my friends. I did this because I wanted him to keep me accountable if I missed a target. It’s actually been revealed that this improves your chances of achieving a goal by 65%.

Stay Cash Poor (Pay Yourself First)

Thirdly, stay cash poor. A lot of people might not agree with me on this one, but I think if you save too much money in a simple bank account, then you get too comfortable. I know I perform best when I’m on the ropes and have a lot of pressure to succeed. By keeping myself cash poor and investing all of my money back into my index funds and businesses, I was able to motivate myself to earn more and remain flexible, not stuck in my old comfort zone and the old ways. This concept is also known as paying yourself first, as you prioritize your investments and then pay your expenses, which is money going into other people’s pockets. Put simply, invest first, then force yourself to find the other money you need.

Alternative Retirement Options

Now, for the people that have made it this far, here’s why you might not want to retire. Traditional retirement was created to help encourage older people to leave the workforce and make room for younger people. However, retirement can lead to a loss of purpose and drive, and many people find themselves getting ill or losing motivation. I discovered this firsthand, as I had enough money to retire in my late 20s. I took a couple of weeks off and started to lose the will to live. I lost purpose, and that’s when I started looking into two different options.

Micro-Retirement

The first, I’m calling micro-retirement. This is a concept where you take a break from work for a short period of time to pursue personal interests and travel, with the intention of returning to work afterwards. It’s different from traditional retirement, as it’s not a permanent state of not working, but rather a way of taking a break from work and returning to it later. The idea is to break up the years of work with periods of leisure and adventure, allowing for a more fulfilling life overall. Now, even though this sounded better, it still wasn’t for me. I didn’t feel like wasting my time doing something I didn’t want to do.

Lifelong Retirement

That’s when I came across the second alternative option: lifelong retirement. For me, retirement means freedom, so I don’t have to do anything unless I absolutely want to. That’s why I build business around doing what I like to do day to day. If I don’t like doing something, then I just hire someone else to do it. I’m sure some people have already commented, “If he’s actually retired, why is he making these YouTube videos?” The answer is that I genuinely enjoy doing it. Who wouldn’t like filming videos and helping people out? Whoever said money doesn’t make you happy hasn’t given enough of it away. And I think that’s even more true for giving away knowledge.