Want to Retire Early? Ditch the Middle-Class Mindset

Meet the Johnsons, a family of five recently profiled by The Washington Post. The Johnsons live in Culpepper, Va., and bring in $90,000 per year -- a full 55% above the median household income for the town. Based on this alone, you might think mom and dad are prime candidates to retire early.

Then again, the family has to pay the bills. All three daughters have a computer in their room, the family shares a laptop and three iPads, satellite TV is available on three flat-screens throughout the house, and all family members except the youngest have a cellphone.

Their savings for college: $0. Their retirement savings: "meager."

When asked what more they'd need to feel financially secure, Mrs. Johnson says:

$150,000 a year. If we had an extra $60,000 a year, we'd have some breathing room. I'd like to have some extra things. Not just look at them and drool.

While I have no doubt that the Johnsons are genuinely good people, it's this type of mind-set that will stop anyone -- regardless of their income level -- from ever being satisfied with their financial situation.

If you want to retire early, it is more possible than ever
But let's give this family some credit: They aren't wildly unusual. Believe it or not, we Americans have never been good at saving for retirement. All of those ideas about the "golden years" of the 1970s pensioners are largely myths.

In fact, retirement alone is a relatively new concept. Historically speaking, people have only recently begun to live long enough to leave the labor force with leisure time on their hands. And even in most of the world today, grandparents commonly live with their children and grandchildren -- so retirement savings didn't need to be so financially all-encompassing.

But the fact of the matter is that today, there are a lot of ways for average Americans to reach early retirement. The solution is both incredibly simple and incredibly challenging. It is the necessity to ditch the middle-class mind-set.

While there's no definitive book on what the "middle class mind-set" is, in the slideshow below, I'll take some oft-cited rules of thumb and show how ignoring them can be hugely beneficial to your financial independence.

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  • Report this Comment On May 24, 2014, at 12:48 PM, Riggerwo wrote:

    This family are a "train wreck" as their pay went up they just expanded with it...living beyond their means...these people can never retire early...maybe a lot later! They have to figure out the "needs" from the "wants"..Many of my friends are just like this..living in the moment..no plan for retirement..no savings....run up the credit cards...piss their money away on mostly silly items...which at the end of the month they have no idea where most of it went. At 65 they are going to be in serious trouble...life is going to suck!

  • Report this Comment On May 24, 2014, at 1:13 PM, segarolow4 wrote:

    1. Do a 50% down size.

    2. Say hell with keeping up with the Jones.

    3. Retire as soon as you can.

    4. GET THE HELL OUT OF DODGE.

    5. Don't look back.

    I did. 61 and having fun..

  • Report this Comment On May 24, 2014, at 1:16 PM, quilt1 wrote:

    I could retire quite nicely RIGHT NOW on just what this family spends for one year on all their "stuff". Where is it written that kids need all of those things the parents are giving them? Do they appreciate it? Probably not. Kids these days expect they are entitled to those things by just having been born. When we were kids we were raised with the belief that if you want it bad enough, earn the money for it yourself. You'll appreciate it more. Kids have no idea the value of a dollar. This family needs to wake up, do a reality check, regroup and start over if they are to make it comfortably into their golden years.

  • Report this Comment On May 24, 2014, at 2:13 PM, pelicangirl wrote:

    Great article, with something that everyone can apply to their life. We gave our kids a choice for college: go to the college of your dreams and we will chip in the equivalent of the state University tuition; or, just attend the state U. They both chose the branch of the state university and lived at home. They had jobs and used the money for gas, car insurance and books. We helped buy the car(s), and paid all tuition with employee bonuses. College was paid in full before they got their sheepskin. They had college jobs to pay the bills, while searching for their career choices - one just stayed in the college job, and they've never been without job, insurance or retirement benefit options. A win-win for all of us.

  • Report this Comment On May 24, 2014, at 2:16 PM, jdull74 wrote:

    The problem is these days everyone thinks that they have to keep up with the Jones's.

  • Report this Comment On May 24, 2014, at 2:25 PM, BelindaLin wrote:

    In America, we have our priorities messed up!!! we spend too much money on things that nobody else in the world spends money on - clothes dryers, cable TV, dining out every day, dish washers, etc. etc.

    Here's the path to retire on your own terms, in 7 steps:

    1) Pay off your debts as fast as you possibly can. If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it. If you want to buy a car, get a reliable beater. Get insurance for $25/month from Insurance Panda. Forget about buying a house until your debts are paid off.

    2) Once you are out of debt, stay out of debt. The only exception to this rule is a vehicle and a house. If you want to get a nicer car, buy used and be able to pay it off in a year or 2.

    3) If you are going to stay in the same spot for at least 10 years, buy a house, preferably with at least a little bit of usable land. An acre is good, 5 acres is better. Take the amount you are pre-approved for and cut it in half - that's how much you should spend on a house. Come to the table with at least 20% down and make a couple of extra mortgage payments every year. If you're going to be transferred or relocate every 5 years, forget about buying a house and rent instead.

    4) Develop multiple revenue streams. Do contract work. Start a business on the side. Invest in a business as a silent partner. Raise chickens, breed dogs or grow apples. Build websites. Buy and sell antiques. Acquire rental property. Sell something that generates residual income. Learn to play the currency markets or trade stocks. Do whatever you can to generate income from multiple sources.

    5) Grow these multiple revenue streams to the point that they generate enough consistent and reliable cash flow to replace your current income.

    6) Make as much as you can. Save as much as you can. Give away as much as you can.

    7) Retire!- the sooner, the better. Be sure you understand that "retirement" doesn't necessarily mean you stop working, it just means having the freedom to do what you want to do, when you want to do it.

    Don't be foolish and fall into the trap of trying to measure your wealth by the value of your assets. Markets change. Valuations fluctuate. Instead, measure your wealth by the amount of cash flow your assets consistently generate.

  • Report this Comment On May 24, 2014, at 2:35 PM, BelindaLin wrote:

    In America, we have our priorities messed up!!! we spend too much money on things that nobody else in the world spends money on - clothes dryers, cable TV, dining out every day, dish washers, etc. etc.

    Here's the path to retire on your own terms, in 7 steps:

    1) Pay off your debts as fast as you possibly can. If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it. If you want to buy a car, get a reliable beater. Get insurance for $25/month from Insurance Panda. Forget about buying a house until your debts are paid off.

    2) Once you are out of debt, stay out of debt. The only exception to this rule is a vehicle and a house. If you want to get a nicer car, buy used and be able to pay it off in a year or 2.

    3) If you are going to stay in the same spot for at least 10 years, buy a house, preferably with at least a little bit of usable land. An acre is good, 5 acres is better. Take the amount you are pre-approved for and cut it in half - that's how much you should spend on a house. Come to the table with at least 20% down and make a couple of extra mortgage payments every year. If you're going to be transferred or relocate every 5 years, forget about buying a house and rent instead.

    4) Develop multiple revenue streams. Do contract work. Start a business on the side. Invest in a business as a silent partner. Raise chickens, breed dogs or grow apples. Build websites. Buy and sell antiques. Acquire rental property. Sell something that generates residual income. Learn to play the currency markets or trade stocks. Do whatever you can to generate income from multiple sources.

    5) Grow these multiple revenue streams to the point that they generate enough consistent and reliable cash flow to replace your current income.

    6) Make as much as you can. Save as much as you can. Give away as much as you can.

    7) Retire!- the sooner, the better. Be sure you understand that "retirement" doesn't necessarily mean you stop working, it just means having the freedom to do what you want to do, when you want to do it.

    Don't be foolish and fall into the trap of trying to measure your wealth by the value of your assets. Markets change. Valuations fluctuate. Instead, measure your wealth by the amount of cash flow your assets consistently generate.

  • Report this Comment On May 24, 2014, at 2:44 PM, pawoodtick wrote:

    My parents were brought up during the Depression. It was hammered into us not to borrow money except for big items. We learned at an early age that we didn't really need most things, and we had to separate our needs from our wants.

    We learned to work at an early age. As soon as I could make change, I had a job working in an amusement park. I was 8. I've been working ever since. I was fortunate enough to not need funding for college. It was cheap back then.

    When it came time to set up household, we bought an old farmhouse with 20% down and had lots of used furniture for our house. We still live here, and the mortgage has been paid off for 20 years. We never had cable or any of the other trappings. We still have the some of the same furniture. The kids had to work for it or do without. We helped with college, and they went local. When they had a job, I charged them rent.

    I retired 2 years ago after I had all my toys, and still haven't collected SS. The wife is soon of retirement age, and she will probably go out early. We have a nest egg thanks to all the stuff we didn't buy.

    It can be done.

  • Report this Comment On May 24, 2014, at 3:50 PM, rocsoe wrote:

    Save 65% of my salary and I can retire in 10 years??? Not when I pay 38% in taxes. That leaves me with 62% and assumes I have 0 expenses.

  • Report this Comment On May 24, 2014, at 3:51 PM, chasechase wrote:

    I retired from the military in 2005, after 25 years in the service, I bought a nice home, had an SUV, Boat, Convertible and motorcycle, a great (demanding job working for DOD (department of defense).. after a few years of evaluating they way things are going in this country and the goals I had in mind for my late 50s and on, I got rid of the house, the sports car and boat, (and the job) bought a bank owned condo that was a total dump and re-did it the way I wanted , I have a total payment under $800 a month, and that includes everything except electricity and cable TV, and I still work full time. I'm not buying ANYTHING else , prepping for the time in the near future where I'm the owner of my days..

  • Report this Comment On May 24, 2014, at 4:27 PM, birder700 wrote:

    I did retire at 55--15 years ago--and I did not make anywhere near $90,000 a year. I only paid cash for everything other than my mortgage. Paid that off after 10 years. Had a 401k and an IRA. Started the IRA way before 401ks were available. Put the max into the 401k every year. Bought used cars until 1981 when I bought my first new car. Never bought a new car that got under 35 mpg. Never had cable until my wife begged and pleaded about 10 years ago. Still do not have a cell phone. Put 2 kids through college although I told them I would pay only the amount that state colleges charged. One got a scholarship to a private college and worked during the summer to make up the difference. Never up scaled my house to a McMansion. To hell with keeping up with the Jones. Now I go on an average of 2 or 3 birding trips a year (they are not cheap) and I have managed to increase my net assets every year except 2008. Made up for that during 2009.

    In other words I make damn sure I do not spend more than I make and I DID plan for early retirement. I probably could have retired even earlier except for the problem of health insurance. My company still provides that for which I do pay--supplemental.

  • Report this Comment On May 24, 2014, at 8:33 PM, gayle wrote:

    No wonder they don't have any college savings with computers in every bedroom and ipads and iphones, etc. If you make 90K you should be able to save some. With their mindset 150K wouldn't be enough either

  • Report this Comment On May 24, 2014, at 9:56 PM, roger142 wrote:

    Wow, There is so much stuff Americans just have to have. 3 daughters, 3 computers. God forbid their children have to share a computer. Of course I was a kid in the 1960's when people with 2 TV's were considered rich.

  • Report this Comment On May 25, 2014, at 12:01 AM, kankemike wrote:

    My wife spends all my money. Enough said. Spoiled growing up, hasn't changed.

  • Report this Comment On May 25, 2014, at 12:54 AM, Chrisk51 wrote:

    This is my retirement plan. I turned 52 last week. I have 46 stocks so far. for the next 10 years buy 1 or 2 more every month. get out of debt again. by the time I'm 62 I should have between 166 and 286 stocks. I should be able to get 2 a month most of the time. The ones I buy now should double by then. If I don't sell my rental property by then I would sell it. then if I think I can afford it. retire at 62-65 selling one stock each month. Not much of a plan but its what I have to work with. my 70k in my 401k should help but its going to be my rainy day fund. not planning on selling. (mutual funds)

  • Report this Comment On May 25, 2014, at 1:40 AM, Lbe wrote:

    While I commend fellow commenters' financial discipline and responsibility, as well as their exhortation to readers to live within their means, I deplore the author's criticism of the American middle class lifestyle and dream. Why not instead write to urge companies, which are recording record profits, to not keep wages disgracefully stagnant?! Otherwise, it won't stop until the American Republic becomes a fiefdom.

  • Report this Comment On May 25, 2014, at 1:43 AM, BelowScope wrote:

    Unbelievable they wrote about this nearly 20 years ago in the book "The Millionaire Next Door" and yet so many people haven't even thought about changing their behavior.

    At the end of the day it's always the people who look like they have everything that don't have a pot to piddle in. Unless you've inherited a substantial amount of wealth or been abnormally successful, there's no way you can afford to purchase the kind of upper middle class lifestyle many have bought for themselves without sacrificing somehow. For most that has been their financial security in retirement.

  • Report this Comment On May 25, 2014, at 4:17 AM, arkbiz wrote:

    When we married we made 50% of the median family income - and we received "CARE packages" and other considerations from my parents. Gradually our income went up - but our mindset remained working class. Our furniture was used or something ugly but utilitarian, knocked together out of lumber. Our cars were generally econo-boxes. Our vacations were camping. Our clothes were cheap. We tried (not always successfully) to eat at home. Our 1200sf house had a single bathroom.

    People at work couldn't believe that we lacked cable or a dishwasher.

    But w/o any comprehensive planning we were in great shape at retirement. We moved into a larger but still modest house, albeit w/ an unusually beautiful view - and we filled it w/ good quality solid wood furniture. We live better in retirement than we did prior.

    This all worked because we thought of ourselves as poor long after that ceased to be justified.

  • Report this Comment On May 25, 2014, at 6:04 AM, greyhound44 wrote:

    Yet another seriously illiterate retirement article.

    Sure, earn tons of money (US$700,000. + annually was not uncommon); save every tax-advantaged dime and lots more.

    Retire early (31 Aug 2003 at age 58.75) after having paid MAX (SS portion) of FICA; only $199. in property taxes in the US since 2004 and NO income taxes since 2007.

    Took MAX SS retirement benefits (reduced for age) at 62, and Medicare A; B; D, and F supplement at 65.

    My downsized house since Aug 2005 is now 6500 sq ft, with a housekeeper and gardener in Conde Nast's 2013 "World's Best City"

    Salud

    retired expatriate

  • Report this Comment On May 25, 2014, at 6:24 AM, Mathman6577 wrote:

    I'm retiring this week at age 55 after a 32-year career. The key was spending less than what I earned and investing the rest (and the investments were relatively conservative). I think Brian hit the nail on the head in the first few paragraphs --- the family had too many "things". My advice is to spend money on experiences and not things.

  • Report this Comment On May 25, 2014, at 6:34 AM, tonyatn wrote:

    This reading did not show me how to retire early.

    I don't see how owning a house can make you retire early. Owning nothing is probably a better way (puts you in a situation where you may qualify for free or low health insurance costs).

    And having kids, good luck, you will never retire.

  • Report this Comment On May 25, 2014, at 7:09 AM, dbtheonly wrote:

    tonyatn,

    Living on the heating grate at 4th & H is early retirement too. Don't really think that was the point of the article.

  • Report this Comment On May 25, 2014, at 8:01 AM, Hulgar1 wrote:

    Looks like many posters had a similar path to an early retirement as I have @56.

    Simple living, drove economy cars a decade/>100k each, brought my lunch to work. Avoided monthly payments for anything possible. I went the added step of building a house myself over ~ 5 years with cash I'd saved the previous decade, so net result was full home ownership in my early 30s and never had a mortgage. Kept paying myself that money into mutual funds/stocks.

    Our early family activities typically centered either around volunteer activities, hiking, camping, biking, tennis, car trips to visit family in other states, museum trips, movies, festivals, etc. Relatively Inexpensive yet great activities that established great memories and relationships with our children and many friends.

    The last few years, we now are spending more and enjoying the fruits of our efforts. Many co-workers over the years hinted I was "cheap" because I brought my lunch and didn't buy a new luxury car every other year like they did. Same co-workers that never donated time or money to help others. Too focused on consuming and instant self gratification.

    Today they wonder how I can now afford to retire so early before many of them, take my family to Maui every year, paid for the kids college and still have millions of dollars saved for retirement. The comments I get are along the lines of it must be nice ; that I somehow must have been lucky, inherited money, won some lottery, etc. since we work the same basic jobs/made the same money and they have little saved and will be working (at least) another decade.

    All I did was create a life long plan/roadmap to achieve financial independance in my early 20s and stuck to it. I worked harder and purposefully lived well below my means/saved the difference while not wasting money on many things that have no long term meaning.

    But, many co-workers will never be able to understand or admit they could have achieved the same things if they tried. Such is life - we all have choices and live with the decisions. Set a goal, make a plan an head that direction. Even if you don't fully achieve it you will likely be better off in the long run. Good luck to all.

  • Report this Comment On May 25, 2014, at 8:21 AM, Mathman6577 wrote:

    @Hulgar1: I bet your former coworkers are still working to pay for their $10 lunches and new car every 4 years. I like you brought my lunch to work each day and I estimate that I saved $20k by brown bagging. That 20k has probably grown to $40k now.

  • Report this Comment On May 25, 2014, at 9:00 AM, TMFCheesehead wrote:

    Thanks all for the comments.

    @Lbe-

    While I certainly think that's an issue worth addressing, it wasn't the point of the article. Indeed, if the typical mindset is held after companies raise wages, the exact same tendencies would surface, only at higher levels of consumption.

    @tonyatn-

    Here's an article that may help what you were looking for: http://www.fool.com/investing/general/2014/03/15/how-to-reti...

    Best,

    Brian Stoffel

  • Report this Comment On May 25, 2014, at 10:48 AM, dboller wrote:

    Interesting article and slideshow ... I'd contend that the family featured -- if granted the wish for "another $60K for the extra things" -- would find that there's no limit to the appetite for "more" and would follow the predictable pattern of spending above their earnings level.

    With the persistent focus on earnings, lost in the discourse is contemplation of a reduction in spending. I'm thinking that a reality show imposing upon typical entitled participants with an insatiable appetite for more with a circumstance of living with only the essentials -- food, basic shelter [500 sq feet?], etc. -- to met out how toxic consumerism has become.

    In a more personal context, upon experiencing the harsh reality of the dot-com market decline, we determined that semi-retirement in 10 years held considerable merit over the alternative of full retirement at some undetermined amount of time down the road [if ever] and devised a strategy to down-size, cut debt and spending while maximizing savings.

    Fast-forward to the present, and we've been traveling in our motorhome for the past three years, living in some of our favorite environs [national parks, ski areas, etc.], taking on seasonal jobs while supplementing those earnings with contract virtual work. The only thing we'd do differently is we would have started sooner.

    As featured [or implied] in the slideshow, an attitude change can change lives in a very positive way. Small house, used car, meals at home and community college [to name a few] could be game-changing tactics that lead to a richer life while making room for what really counts.

    My opinion ... could be wrong ...

  • Report this Comment On May 25, 2014, at 11:33 AM, footballs2000 wrote:

    Hulgar1, there are a lot of similarities in our situations. I'm 33 and have zero personal debt. I bought my house at a property tax auction, put it on a 5 yr note and paid it off within 2 yrs. We remodeled the inside ourselves, actually still not totally done. I got on the Dave Ramsey kick about 1.5yrs ago.

    I started buying rental property at 19, and got up to 100 doors, I've started to downsize though, currently at 66 doors. I'll probably take it down to 30-40 doors. This business got too time consuming, because I have a fulltime job too. None of these are paid off, but the majority were older places and put on 10-15 yr notes.

    My wife and I drive Toyota's, extremely reliable and paid for. Mine is getting some age 13 yrs old now.

    Since we got out of debt, we are now putting $33,000 back annually into 401k, Roth IRA's, and regular accounts.

    A lot of work, but we will hopefully enjoy the returns someday.

  • Report this Comment On May 26, 2014, at 10:07 AM, Carrot1530 wrote:

    The problem is at the end of the road they will expect the Government to bail them out and provide for them.

    It's easy to retire early, live below your means, buy pre owned quality vehicles and keep them till the wheels fall off, do your own maintenance whenever possible, cut your own lawn, and save/invest so your money is working for you.

    I gave up work at age 61 and have never looked back.

  • Report this Comment On May 26, 2014, at 10:38 AM, DACircles wrote:

    These people are clueless. If they have to work for the rest of their lives it is their own fault.

  • Report this Comment On May 29, 2014, at 3:45 AM, The1MAGE wrote:

    While this article does have some good info, it's still stuck in the middle class mindset.

    A job, IRA's, Socialist Security. All of these are part of the middle class mindset. Admittedly it is superior to the poor mindset, but it is middle class thinking.

    At a job you work for an income, whereas I work to create an income. When I am done working, the income is still coming in.

    IRA's defer taxes, but I am doing the similar in real estate. When I sell, I use a tax favored exchange, and the growth rolls over into the new property. But if I don't roll it over, I am not penalized for early withdrawal.

    Real estate rental income is not considered earned income, so it is not taxed for SS.

    It is possible I may not pay in to SS for the next 20 years, so my SS income will be reduced from what it could be, which is fine with me because that money will be invested at a much higher return then it could possibly make in SS

    I'm not waiting till I'm almost 70 to enjoy life, and I'm not relying on a plan that fails if I don't happen to die soon enough.

  • Report this Comment On May 30, 2014, at 4:43 PM, Zinj wrote:

    take coffee to work. No, it's not as good as Starbucks...its maybe 80-85% as good (so, pretty solid). But it costs 1-2% a much.

  • Report this Comment On May 30, 2014, at 4:50 PM, gskinner75006 wrote:

    "I'd like to have some extra things. Not just look at them and drool."

    That is the only thing one needs to know, but it should read "I'd like to have things. Not just look at them and drool."

    You have to decide between today and tomorrow. Between want and need. No more. No less.

  • Report this Comment On May 30, 2014, at 7:04 PM, valari25 wrote:

    I love all the comments about how people should eat ramen and live in crappy homes or tiny apartments and flog themselves for daring to spend an extra nickel.

    Me, I'd rather live my life and enjoy the ride. I have a nice home that I put 20% down on, with a 30 year mortgage at 4%. Screw paying it off early, that is cheap money for 30 years! I max my ROTH ira each year, save money each month for my 2 sons college funds and put away some extra when it comes around. My wife is a great cook but we do eat out on occasion. We have the gadgets, we have fun, we enjoy our time together. We also save for retirement.

    Living like a hermit? Screw that. Live your life to the fullest with an eye to the future. Anything else and I think you've wasted your short time on this planet.

  • Report this Comment On May 30, 2014, at 7:46 PM, Bert31 wrote:

    Wow retire early and do what exactly? You dedicate your life to being a productive member of society, become a master at some trade or skill, then just up and stop one day because someone says you should want to stop working? How many 90 year old shut in wish they didn't retire at 55 and spend more time working? retirement is overrated. Yes, I'd love to spend more time with my kids and family, but thats what vacations are for.oh but wait, those are waaaaaay tooo expensive, we can't have any of those. Ok, i gotta go fill up my inflatable pool with the rainwater i collected. Saving a bundle on shutting off my water, and the garden has never been so fertilizd...if i get my binoculars, i can see through my neighbors window and watch their cable!!! (Hope they don't go to bed too early)

  • Report this Comment On May 30, 2014, at 7:51 PM, dcrednek wrote:

    Great article. Sure, folks can nibble around the edges to provide other ideas of marginal importance or improvement to this article, but the author has captured the biggest, most powerful drivers of long-term financial stability. Bravo!

  • Report this Comment On May 30, 2014, at 10:48 PM, TMFCheesehead wrote:

    @valari25-

    I'd say you've lived well within your means, and that is really the whole point of the article. If some want to eat ramen to get there--the more power to them. But it certainly doesn't have to be a requirement.

    @Bert31-

    I couldn't agree more. Another article for another day will tackle why the common conception of "retirement" stinks, and should be replaced with what many are calling "Financial Independence." Do what you want, when you want it. Usually, that means continuing to participate in society and surrounding yourself with your tribe...all without having external controls on your time.

    Best,

    Brian Stoffel

  • Report this Comment On May 30, 2014, at 11:11 PM, FoolSolo wrote:

    Good article Brian, you captured the essence of the typical American middle class mindset in a concise, readable article.

    I believe in the simple principle of living below your means, but most importantly is paying yourself first (savings) before you pay for anything else. I have automatic transfers to my investment accounts, and payroll deductions to my 401K, which I max out. Whatever is left over pays for everything we need. We do without some luxuries, but we lack nothing.

    The typical American way of life is to buy lots of things you don't need, spend as much or more than you earn, and save little if anything for retirement. Unfortunately, this is a recipe for unhappiness. I commend the commenters who broke with this mindset and found a path to early retirement... you're the exception, jot the norm.

  • Report this Comment On May 31, 2014, at 11:36 AM, Estrogen wrote:

    Brian,

    Well done indeed. The observations and criticisms of this family identifies the financial acumen of the Motley Fool Audience. This family is way closer to the rule than the exception, except the average family earns less than them. I'd argue this family is normal and Fools are the exception.

    Generally speaking it takes an exceptional income, a single person, above average investment returns, or TWO parents who believe in living your lifestyle.

    For me and my family, I have only been able to achieve the above average investment returns, but started to put away 10% at age 25. 51 now, do have happiness, help 3 kids thru college, 1 wife, and am on track to retire at age 62.

    Motley Fool is a great site for stuff like this and if a young couple follows the advice of this article, they should do well. I'd throw expensive cars to impress people you don't like, with money you don't have in there as well:)

  • Report this Comment On May 31, 2014, at 12:41 PM, Teo123 wrote:

    I think the person who said to develop multiple revenue streams is right. Now, in my view, you don't need to sell all your stuff on eBay or become the neighborhood lawn mower or whatever to develop multiple revenue streams.

    If you spend some money on securities and enjoy some dividend income that is not a bad idea. But the point is, you really need to find ways to not squander your salary on computers and iPads and all sorts of crap for the kids. Mostly, what they want is your time.

    As for luxury, there are benefits to having something that's nice. I like cars -- and I don't see them as investments. I think it makes more financial sense to spend money on a decent family vacation, which in my case is an investment in my family because I work a lot. Having us all together for a week in decent accommodations makes a lot more sense than buying a nice car.

    Fully, I disagree with the suggestion about college education. I think every 18 year old has different needs. Not all of them can go to Land Grant U. Not all of them should go to Land Grant U. But know this: where they go will follow them for the rest of their life. Every employer or potential employer will notice where they went to college. Every colleague will, too. And the outcome -- what they learned in college -- is hugely important. It's a big decision and not necessarily something that can be determined solely by tuition costs.

  • Report this Comment On May 31, 2014, at 3:55 PM, TMFCheesehead wrote:

    @Teo123-

    My favorite line: "Mostly, what they want is your time."

    Brian Stoffel

  • Report this Comment On May 31, 2014, at 5:25 PM, TMFBreakerRob wrote:

    Well done, Brian!

    I wish I had read this article 40 years ago. I might have been able to retire even earlier! :D

    I hope lots of folks do some heavy thinking about this…. and dial back. Probably our biggest goofs (besides an unsuccessful business 30 years ago) were the ongoing effort to "own as much house as you can afford" and not keeping our commutes down.

    We were spending a crazy amount on both. If the "excessive" money were to be applied to retirement, I'm sure the positive results would have been noticeable. :)

  • Report this Comment On May 31, 2014, at 9:48 PM, CharlesGreen wrote:

    The best ways to ditch this mindset, realize that you have the power top put money away, save, invest, and make moves with that money you are putting away. The best ways that I have found (personally) do this are:

    1. Review your car insurance regularly, the big guys like geico and esurance change their pricing every year.

    2. Pack a bag lunch most days. Save money by eating out less in general.

    3. Don't waste money in bars. They are the biggest frivolous expense in a lot of lives.

    4. Get rid of financial advisors who do not bring you any value. The 1% a year they cost adds up to enormous sums over a lifetime.

    5. Don't be above using coupons.

    6. Do what Suzey Orman recommends and trade in expensive whole life policies for Term life. Mine from Life Ant costs $19 a month and I can sleep at night knowing my family is secure if anything happens to me.

    7. Drive slower. You can increase fuel efficiency 20% by driving slightly less aggressive, and slowing down 5-10 mph on highways.

    With simple changes you can probably save about 25% a year, without big lifestyle sacrifices. When I retire, I will have the cash to buy my condo in Hawaii outright.

  • Report this Comment On May 31, 2014, at 10:34 PM, SeriusGal wrote:

    Saving is a learned habit. Many of us think it is a luxury we cannot afford. Learning the value of saving takes a village. Thank you Motley Fool for providing that village.

  • Report this Comment On June 01, 2014, at 11:47 AM, EricHawman wrote:

    I wouldn't call it the "middle-class" mindset. It's the "live for today" mindset. You want a better future, you have to be focused on the future. Live far below your means. Get involved in your school district, so that instead of moving to a good one, you MAKE a good one.

    Urban planning can help, making communities where everything is in walking distance, or nearly so. But families by themselves can do a lot by being more connected and setting their sights lower in the short term.

  • Report this Comment On June 01, 2014, at 2:46 PM, swocrates100 wrote:

    Just finished reading the article on the featured family. It is pretty hard to feel any pity for these folks as they seem like they have a spending problem.

    Their mortgage payment is only 700 dollars a month and they make 7500 a month ( I assume before taxes). Sounds like they have some pretty substantial credit card debt. Their cell phone payment every month is pretty high. I assume some of their other bills are pretty high and they have significant credit card debt.

    I make a bit more than these folks but live pretty simply and as a result have $6000 a month to invest. My wife and I only eat out 1-2 times a week. Our main recreation focuses on taking out dogs to the dog park and our wardrobes are pretty simple.

    Overall I thought the article from the Motley Fool was straight forward and a good reminder of keeping things simple.

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