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How’s it going everybody this is the bush today i’m gonna talk about frugality and how this is key to retiring early this video is brought to you by the moomoo trading app you can get five free shares of stock valued between three and thirty five hundred each just for depositing one dollar they have a new promotion going on which is skill based if you know a lot
About the apple stock you can take a really really hard quiz and if you get 100 correct you can get a free share of apple stock so essentially if you sign up for this you can get six free total shares of stock for free check out my referral link down in the video description below first let’s talk about savings rate most people are going to save about 10 every
Year and if you save for let’s say 30 years at 10 you’re gonna have enough to retire for three whole years this is not counting any kind of market gains let’s take a look at this table here and it assumes that you make 100k just for some really nice round numbers over here savings rate of 10 you’re spending 90 000 every single year if you make 100k and you save
10 10 of 100k is 10 000 so by the time let’s say you retire and you’re still spending 90 000 a year you actually need to save for nine of these years in order to have enough money saved over there to retire for one year right nine times ten thousand dollars is ninety thousand dollars what gets really interesting here is if you reach about 50 savings rate what
Happens here is that every single year that you work you are essentially saving one year of retirement so it doesn’t take that many of these years before you can actually retire early let’s say you’re 30 years old you work for 30 years you’re now 60 years old now you can retire until you’re 90. what gets really interesting is if you push your savings rate really
Really hard to probably 70 80 90 and beyond when you’re around 70 of savings rate this puts you squarely in the early retirement mode type of people where you save a whole bunch of money i’m gonna talk about how this is possible in a little bit but let’s say you save 90 of your income that means every single year you are spending only 10 000 it sounds ridiculous
Right but you’re saving 90 000 which means you’re saving nine years of retirement every one year that you work so it doesn’t take many of these years in order to actually retire early maybe three or four years of saving at 90 percent rate so this sounds really really attractive that oh wow you know you only have to be in the workforce for three to five years and
Boom you’re retired but of course this requires you to spend at a really really low level at ten thousand dollars only personally i pushed it to one hundred percent savings rate and now i’m going to talk about how this is possible this is kind of like a slight accounting trick because the savings rate is really only looking at my salary income all the side income
I had is just funneled towards my expenses so i didn’t really count that as income it’s like oh i just made that on the side so if you’re able to reach 100 savings rate it essentially means you no longer need your job income in order to survive because you’re pulling in a bunch of money from side hustles whatever ebay youtube or whatever and this essentially
Replaces whatever amount that you need to live on so take a look at this chart over here once you reach 50 percent one year of work is one year of savings but then look wow when you reach 70 89 percent it really really skyrockets in terms of amount that you save for retirement every year so i’ve been really frugal and i have a lot of tips and tricks on how to
Do this essentially i think subscriptions are toxic because they make you go on this automatic spending spree you sometimes forget about the subscription so then money just automatically goes out of your account it’s kind of like poking holes in your bucket and it’s leaking and sometimes you might even not even use the service like netflix right maybe you don’t
Even watch it for one month or your magazine subscription or your apple icloud you know i don’t have that i just make sure i back everything up onto my hard disks i’m not saying to not get any subscription at all because sometimes i would actually get subscriptions for one single month i would get like hbo or something and i’ll just binge watch everything for an
Entire month and then cancel it the next month so i get it for one month at a time i just use it heavily and then i cancel it i do have one single subscription though which is photoshop and this might be interesting for some of you who need photoshop for whatever reason because normally it would be 20.99 per month and if you get the photography uh subscription
Type it’s only 9.99 so that’s the one that i personally get coffee is probably a well beaten down topic it’s like don’t buy your five dollar coffee all the time and then you can save a lot more so my take on this is i personally go get five dollar coffee sometimes it’s even seven dollars because i order almond milk and then i tip them so you know one dollar and
Then another dollar is like boom seven dollar coffee now my take on this is that it’s okay to go to a coffee shop just as long as you don’t make it a habit it’s not like you should go every single day or even every single week the way i do it is that i make sure it’s a brand new place it’s a very very highly rated place i buy it as like a movie ticket i get a drink
And that allows me to sit there and i sit there for an hour or two you know to chat and whatnot use the laptop use their facilities so i do it in a way where it’s not automatic i’m not going there just to get my caffeine fix i’m going there as an activity and i do it rarely maybe like once or twice a month or so so you know it’s not very very big spending just
You know five dollars seven dollar even if it’s ten dollars it’s okay my spending right now is only about fifteen hundred dollars every single month because i try to get my expenses as low as possible now that’s only on the surface this is you know my housing all my utility bills everything my groceries my insurance all added up together this is 1 500 roughly
Every single month when you look more deeply underneath i actually try to get some of these utilities paid for by itself i’ve talked about ohm connect plenty of times and this is what i use to try to help pay electricity by itself through these activities that you can turn off your electricity on certain home hours and then you can get some money paid back to you
And i use this to pay my utility and because i am such an active user of this i’m like really really on the ball that i’m almost able to pay for my entire bill just the combination of these two things together suffice to say that if you are pg e southern california electric san diego gas and electric and now con ed which is in new york you can actually sign up
For this thing and my referral link is down in the video description below now i’m not able to get every single utility paid for by itself one of the hardest ones would be my atnt internet bill like i could not for the life of me try to get it at a lower and lower cost so what i do instead is i just go fine i have to pay for this out of my own pocket with cash
So therefore i’m gonna try to get some other way to pay for it you know some other recurring income maybe amazon affiliate links maybe i will buy a chunk of stock that has dividends i like to look at it in terms of how much i have to buy in order to get free internet forever for example let’s say you have a dividend stock that pays you five percent you have ten
Thousand dollars laying around and you can invest this and you can say this is just for my internet service ten thousand dollars into this dividend stock at five percent is five hundred dollars this is roughly about the yearly cost of my atnt internet bill it’s 55 every single month so it’s about what like 600 dollars so you know roughly around the right numbers
Okay so you buy a certain amount of a certain dividend stock i’m gonna leave it there designate it as for a certain bill and this is kind of an interesting way to do things because this forces you to keep that there so that it would pay for your bills indefinitely one of my ways to save is to not buy groceries how do i do this is sometimes i am prone to whenever
I go to the grocery store i i over buy like sometimes i go to costco i over buy and then sometimes i look at my fridges like bursting overflowing with food so sometimes i would go on these binges of trying to eat up every single item in my pantry and in my fridge and in my freezer i just try to consume everything just make sure that when you try to do this it’s
Not expired maybe you might need to replenish your vegetables or fruits because those goes bad really quickly so you only buy the things that you need and try to consume everything else right like if you have a lot of frozen meat eat those first don’t buy any other meat if you are all out of vegetables yeah okay fine you can buy vegetables at that point and what
You’ll find is if you do this purge your refrigerator purge you’re gonna save a lot of money and you’re also going to waste a lot less food because things don’t go bad as much anymore if you’re able to purge all the stuff in your refrigerator last but not least is oftentimes if i see a really really good deal usually it’s these half off price things i would
Recognize as a really good deal and i would actually buy two of them what happens when you buy two is you essentially get one of them for free if you go and flip the other one on ebay on facebook marketplace or somewhere and you essentially have one of the items paid for itself and then you’re like well why don’t i just buy a lot more of it or i might why don’t
I buy three or four of it yeah maybe you should because if you sell one of them you might have to pay some fees you know so you might need to sell two of them in order to make enough money to pay for that one item it’s just like a game i’d like to play because i’m like haha you know i bought these headphones i don’t have to pay anything for it because i made the
Item pay for itself it’s just kind of like a weird hobby of mine i did the same thing with tesla stock with my tesla car so it’s just something interesting to do i hope these ideas are interesting for you guys don’t forget to give me a like and subscribe for more thanks for watching you
Transcribed from video
Why Frugality is the Key to Early Retirement By BeatTheBush
