retiring early is a dream that many have, but Pete’s Financial Independence Retire Early philosophy is finding takers.
“I am in control of my cost of living. everything I do is a decision, and it’s made by me, not the world around me.” this was the core philosophy that led Canadian personal financial blogger Pete Adeney to take early retirement when he was just 30 years old.
now 48, Adeney, also called Mr Money Mustache, helps people retire young by sticking to the Financial Independence Retire Early (FIRE) philosophy. he advocates frugality and stock investments to build a wealth corpus that would help individuals retire early.
it is the simple discipline of paying credit card bills on time and saving 75% of the disposable income month-after-month that will reap dividends.
born in a frugal Canadian family, Adeley started working at gas stations and convenience stores from the age of 15, saving $5,000 from his $650 a month pay. he picked a local university so that he could graduate with zero education loans.
after moving to the US for better work opportunities, Adeley chose shared accommodation and a used car to save up. Adeley cut down on all discretionary spending to save up to $7,000 every month. and this is how he was able to retire from his software developer job by the age of 30.
instead of relying on complex investment strategies, Adeley stuck to one theme: spend significantly less than what you earn. he says that if you can save 50% of your take-home pay at age 20, you’ll be wealthy enough to retire by age 37.
for Adeley, this meant going out less often, not taking car loans, and riding a bike wherever possible.
Adeley retired with $600,000 and invested these funds into index funds. he says in his blog about following a dead-simple asset allocation — a bunch of index funds at Vanguard and Betterment — which pay quarterly dividends.
a strong proponent of stock index funds, Adeley advises ‘Mustachians’ to not rely on a job for financial independence. and when you get to 25 times your annual spending saved up and working for you, that is enough to live off. forever.