I often talk about how I desire to retire early. I think I have made it clear that I don’t plan to just sit around in retirement, but I see it as an opportunity to focus on the projects that I really want to do. I don’t want to be tied down to a job or stuck in a 9-to-5 if I don’t want to work there. It’s not about laziness, it’s about setting up a system which will give my financial security. People often ask me why I think it is possible, emphasizing that they think I am crazy. I don’t think it will be easy, but there is at least one thing that will keep me from me achieving my goal. It’s the same thing that all early retirees have in common: lack of debt.
Why Not Having Debt is Important in any Retirement Plan
Not having debt is an important step to retire early because it lowers your necessary expenses. Not needing any help with debt is crucial because you have a lot of flexibility. The most common debt that workers like to pay off before retiring is a mortgage. Having no monthly payment for housing provides an extra savings each month. This allows individuals and families to maintain their lifestyle in retirement much easier because there is a huge portion of expenses that is missing. This extra cushion is often what is needed to convince people that they can retire early.
Keeping my expenses to a minimum and avoiding debt is one of the reasons why I think early retirement is possible, even for someone in their 20’s. While I don’t have a paid-off home, I have avoided college loans with a passion and worked hard to avoid borrowing for any other major expenses (like a car, vacation, etc.) because I know it offers me more freedom in the future. If you live well below your means and save money for big purchases, you can do the same thing. There’s no reason to live in a constant cycle of debt.