No matter how you found your way to The Motley Fool, the odds are high that if you're reading our articles, listening to our podcasts, or checking out some investment options, you're at least somewhat thinking about your plan for a comfortable retirement. After all, our mission statement until recently was "Helping the World Invest -- Better," and one of the biggest things anyone invests for is their old age. But what if you don't want to wait until you hit your 60s or 70s to fully enjoy the fruits of your labors? If that describes you, you're not alone: A small but growing community of people in this country are coalescing under the acronym FIRE, which stands for Financial Independence/Retire Early. They're living on less, saving much more, and preparing for -- if not full retirement -- a point where they have sufficient resources to feel fully in control of their lives.

In this episode of the Motley Fool Answers podcast, hosts Alison Southwick and Robert Brokamp have invited Jonathan Mendonsa and Brad Barrett, creators of the ChooseFI website and podcast, to join them. In this segment, they get down to business and cover the basics of how they modified their lifestyles and spending to position themselves for financial independence decades ahead of the traditional timeline -- and how you can, too.

A full transcript follows the video.

This video was recorded on Oct. 09, 2018.

Robert Brokamp: Let's get down to more practical stuff. Let's say someone's listening. You really have their interest piqued. What are the first few things they should do to put themselves on the path to an FI lifestyle?

Jonathan Mendonsa: Let's take a look at the simple equation. What you earn minus what you spend is equal to the difference of the gap. We want to grow the income, we want to decrease the expenses, and we want to figure out how to optimize the difference. Those are three different strategies with virtually unlimited options around them, and you need to look at where you are on the spectrum.

What is your problem? Is it you have great income? You've got a decent baseline but you just don't know what to do with the difference. Let's talk about that.

Let's say that you are just paycheck to paycheck on $100,000. Let's talk about that. We've got to figure out what individual we're actually talking to. The FI community is really good on the spend-less side of things and we're really good at the optimize-the-difference side of things. I think that in this particular conversation, this is probably where we can add a lot of value.

I think that earning more is great. I think all of us should look at earning more. I think it's a great opportunity, but it's a little more nebulous. Like, what am I going to do tomorrow? Let's talk about career hacking. Let's talk about alternative careers. Let's talk about moving across the street. Do a start-up. Do a side hustle. I think just for the sake of this short conversation we should say that that's great. Let's focus on earning more, but let's just set that to the side and let's focus on the other two; spend less. And Brad, there's a bunch of really cool levers that you can pull almost immediately to kick that savings rate into gear.

Brad Barrett: For me, it's the big line items in your budget. Again, we don't want to live this life of deprivation, so we can talk about cutting out Starbucks and avocado toast, but to me that's beside the point. It's how do you design that life that things that you buy actually matter?

For me, it's housing makes up probably about one-third of people's budgets. Cars somewhere in the vicinity of 15% to 20%. I think you can look at those immediately. Obviously, that's a big decision for many people. Moving is not something you take lightly, but if it matters $1,000-plus a month, maybe it's worth looking into.

I think some really simple ones are food. People just hemorrhage money on food. For me it's about being intentional. My family cooks basically all of our meals, and our meals cost about $2 per person per meal. That sure beats going out to the local grocery store and even just getting the prepared food there for $10 a pound; not less going out to dinner for whatever plus drinks plus tax and tip. I think you can save many hundreds of dollars per month just on food alone. I think to me that is the simple low-hanging fruit.

Just looking at subscriptions. I think looking at your phone bill. My phone bill through Republic Wireless costs me under $20 a month. I have a regular smartphone. You wouldn't know I'm doing anything crazy. I'm just a little more intentional. So it comes back to that -- intentionality. I don't download YouTube videos and podcasts when I'm off Wi-Fi. That is literally the only thing I give up, otherwise I have a perfectly functional normal human's phone. I just don't do those couple of things. Is that like a "oh, poor me, cry me a river" type deal? Or is that, "Wow. I'm saving $1,000 per phone line per year." It's an obvious choice once you're presented with it.

Again, it's those kinds of things. Cutting the cable, etc. We could talk about this ad nauseum, but there are these items to look at.

Mendonsa: I don't want to belabor this particular side of things, but just to point out how powerful this is. We talked about the car earlier in the conversation. If you are to do the math on the true cost of car ownership, if you are to basically look at the difference between buying that brand-new car and financing a new car for life vs. just having, frankly, one new car, paying it off, and sticking with it for years and years and years until it disintegrates into dust in your driveway, the difference is $1 million. I mean, it's that truly incredible.

If you look at something that's a powerful idea called house hacking, it's a big word for basically saying you buy either a single-family home or a duplex or triplex. You'll stay in one room and you rent out the others hopefully with enough to cover most or all of your rent, so you live for free. Imagine just simply living for free. Cutting that line item for your budget. And then if you want to compound that, we know that between your home costs and your transportation costs that's 50% of most people's budget. If you then moved your house that close to your job and you could bike, walk, or very easily go to work, suddenly you have cut your expenses by 50%.

You then put that into the other side of the equation, the life optimization side. For instance, if you have a 1% savings rate, that means it takes you 100 years to replace that one year of expenses. If you have a 50% savings rate, we know that you can get to a point where working is optional within 10 to 15 years using the power of compound interest. That's how powerful it is.

So when you look at your life -- when you look at this as a puzzle -- and you say, "I can focus on any aspect of this, but what do I want to do now?" You don't have to do everything, but my friend, you're going to have to do something. And that's the really cool part of this. Let's just get a little bit better every single day.

And we see this. I was talking to an individual the other day and his name is Chris. He says, "Guys, I found your show last fall, and I was just drifting. I don't know what I was doing. It's so obvious. My net worth has tripled." And there's no hook to this. There's no upgraded mastermind class where now you're going to get the real secrets. It's just stupid simple. Just do it! Just do something each day to put yourself in this better situation!

Brokamp: So some people who are considering this lower-cost lifestyle might think, "Oh, that's fine, but then from now on all my vacations are..."

Alison Southwick: I get to have no fun ever!

Brokamp: We're going to be at the tent at the KOA, but that's not necessarily...

Mendonsa: I have been to KOA, but it was a long time ago. I didn't know they were still out there.

Brokamp: I actually love camping, but the point is that's not necessarily true, and Brad you, in particular, are sort of this ninja in terms of finding ways to see the world for free.

Barrett: Yes, it's been quite a journey for me, no pun intended.

Southwick: Literally.

Barrett: My wife and I have earned, I think at the last count, like 2.5 million miles in points by just being very intentional about our credit card spending. Again, kind of going through the entire FI life, it's living a very optimized financial life. And part of that for me, personally [and, of course, every person is different], but for us we put all of our expenses on our credit cards. We pay them off clearly on time and in full every single month. That's the crucial part of this. If you're not one of those people, just please stop listening.

Southwick: Stop listening right now! We're done!

Mendonsa: So everybody just leaned in to listen more closely.

Southwick: I totally agree with that. I do that!

Barrett: So table stakes, but what we do is we open up very targeted credit cards and earn these massive sign-up bonuses. You'll see, obviously, different advertisements. Spend $3,000 in the first three months and earn 50,000 American Airlines miles, or some such.

Well, if you can redeem those for any type of reasonable value, you're going to get probably $700 to $1,000 in value from that one credit card sign-up, and that's just using your normal spending. In that case it was $3,000 of your normal spending on this card, instead of using the other card that you were getting 1% back, which would be $30. Here you're using this very targeted card and getting $1,000 in free travel.

Now, we've done that over a period of many years -- over probably seven years at this point -- and like I said earned this massive amount of points and miles that we've turned into real travel. So my family of four, and actually the four grandparents, came with us to Disney World. So instead of it costing $4,000 approximately for the hotel, which we stayed on-site, four round-trip flights, and the park tickets, we spent about $150. On one trip.

Mendonsa: And talking about real travel, going back to my story, if you remember that interaction I had with my employer where I said, "Hey, I want to take my wife home to go visit her family," travel rewards had a profound impact on my wife for this very reason. Travel is expensive, and when you marry someone from another country, you're baking that in. The family is important and travel is just going to happen.

Southwick: Put it in the vows.

Mendonsa: Virtually. We're staying here in the States, but I promise we'll come back and visit you guys every couple of years or so. And pre-Brad, I was very happy with my 1.5% cash back card where I would get maybe $30 to $40 to spend. $40 and cash rewards. But post-learning about this and how to implement and benefit from it, it would have cost my wife and I probably $3,000 to go visit her family for two weeks in Zimbabwe. I did all of that using points and miles.

And I want to emphasize how valuable this is, because it's not just that I got the flight for free. If you think about it, in a past life I would have had to pay that same $3,000 for those two air tickets and I would have paid for it with post-tax dollars.

Cards and points are non-taxable. The way they're structured, spending that you were having to do with post-tax dollars and you're benefiting from whatever marginal tax bracket you find yourself in, and not only are you not having to spend the money on it, but then you're getting the travel with tax-free benefits. That is incredible, and this is one of the things that allowed me to just take that line item that was travel in my budget, and just take it completely out.

This is about getting more for less. What if we can get more housing for less because you're using a form of house hacking. What if we can get the same college experience for less? What if we can go and get a better job than we could have just following the traditional college course, and what if we can travel around the world for free? It's been well-documented that this is possible.

Brokamp: Obviously, we'll give the caveat that that means that you pay the bills off, of course, because if you're not paying off you're maintaining a balance...

Southwick: I've been like that.

Brokamp: ... and all that stuff. Some people might have concerns about how it affects their credit score, but you guys have been doing this for years and I'm going to bet that you guys have pretty good credit scores.

Barrett: Yes. I think my credit score started at like a 792 and the last time I checked within a month it was 811. I would say everyone who's hearing this, you need to look at your own life and figure out what works for you. My wife and I have these wonderful credit scores. We said, "OK, this sounds good," but it was a trust-by-verify type situation. "We're going to dip our toes in and see if this works." We have that margin where even if our credit scores plummeted 50 or 70 points, nothing bad would have happened. We had a home. We weren't going to buy anything on credit. There was no risk here, for us, at all.

I've worked with many thousands of people who have been using this similar strategy and I've yet to hear of one person whose credit score plummeted. I think I can speak again anecdotally but with knowing tens of thousands of people who have done this that it really doesn't impact you all that much, but you are going to see, just in your normal course of life, intra-month swings.

Right before you pay off your credit card, your utilization is going to be slightly higher than the day after you pay it off. So regardless of what credit card you're using, your credit score fluctuates. I think you'll probably see a 20-point plus or minus, but if that's within that margin of safety for you, then I see no downsides here.

Southwick: What level of frequency do you find that you guys are opening and closing new credit cards?

Mendonsa: We both, I believe, try to keep it just as simple as possible. To go back to Brad's point, I think it really helps to understand just what credit card companies actually look at. That's been publicly documented and there may be some other factors, but they look at utilization. So if you have a card with a $10,000 limit and you're only using $100, you're not really utilizing your card. That's a positive thing.

The age of your credit. If you have a card that you opened 10 years ago and you still have it, or you have a student loan that you've had forever, that's a positive.

And there's a few derogatory marks. For instance, if you don't pay your bills on time, that's a really bad thing. That's what would hurt you, if anything. Like he said, table stakes for this is make paying your bills on time and in full.

To your other question, I will open a card and I will then just put all of my normal spending on that card until we've reached this certain minimum spend and gotten the reward. Then maybe my wife will open another one. Usually it's going to take us a couple of months to get through a minimum spend on a card.

There are people, I'm sure, that are incredibly aggressive with this. I'm not trying to have 20 million points, but this is a way for me to replace spending that I was already making, putting regular stuff on a card, and then using that to give my family a wonderful trip once or twice a year. And we just have this extra stash of travel that we can use when we need it. Maybe one year we use more, maybe one year we use less but it offers us freedom and flexibility. Where in the past maybe I was looking at this from this one-dimensional place. "I'm sorry, honey. We can't go visit your family because we're paying down our student loans."

Southwick: Once again, for our listeners who want to learn more, you guys are at And then your podcast, if they just go to iTunes and search ChooseFI are they going to land on you?

Barrett: Yes. Just ChooseFI. We publish every Monday and Friday.

Mendonsa: And there is an episode on our podcast where we really went into depth on what this would look like for an individual that wants to get started with this. It's Episode 9 of our podcast. I think it's actually our most downloaded episode of all times, so it would be a wonderful place to start if you were to say, "Hey, that sounds really cool, but I think I need a little bit more information before I really dive into that." Go check out Episode 9 of our podcast.