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This lawyer eats rice and beans to save 70 percent of his salary for retirement

Business Insider logo Business Insider 10/9/2019 Hillary Hoffower
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Some people will do anything to escape the rat race.

Just ask 36-year-old Daniel, a Manhattan corporate lawyer earning $270,000 a year, who told Suzy Weiss of The New York Post that he lives in New Jersey to avoid city taxes, lives on rice and beans, owns one patched-together suit per weekday for work, and layers up during the winter instead of turning the heat on - all so he can save 70% of his salary and retire early.

It's working: He's saved more than $400,000 and is set to retire in three years, Weiss wrote.

Other six-figure earners Weiss talked to have similar goals and are pulling out all the stops to reach them, from banning buying drinks out to wearing shoes that are falling apart.

They all hope to join the Financial Independence Retire Early (FIRE) movement, which was first popularized when "Your Money or Your Life" was published 20 years ago. It's nothing new - but more millennials are becoming interested in the community, according to Weiss.

Read more: What 8 people wish they knew before retiring in their 20s and 30s

Living on less helps early retirees stay on track

Being content with less and refusing to succumb to lifestyle inflation are the tickets to staying on track to retire early.

J.P. Livingston, who runs a personal finance blog called The Money Habit, built a nest egg of more than $2 million before retiring at 28. Livingston worked in Manhattan's finance industry and earned $100,000 in her first post-grad job, she previously told Business Insider.

But, determined to retire early, she tucked 70% of her take-home pay away. In an effort to be more frugal, she bought furniture from Craigslist and chose a living situation more modest than one she could have afforded - with a roommate in a three-floor walk-up on the Upper East Side for $1,050 a month (reasonable rent in a New Yorker's eyes).

Related video: Behind the trend of aggressively saving (provided by CBS News)

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Even those not working in traditional high-salaried careers make do with a frugal lifestyle. Consider Joe and Ali Olson, who quit their jobs as public school teachers in their early 30s with $1 million in the bank. They saved 75% of their income and lived in a 400-square-foot home, keeping their annual expenses to about $20,000, Business Insider previously reported

Frugality is the key to building wealth

Regardless of early retirement goals, frugality is the key to building wealth.

Look no further than Warren Buffett, who still lives in the modest home in Omaha, Nebraska, that he bought for $276,700 (in today's dollars), or Richard Branson, who is famously frugal when it comes to buying luxury items.

Frugal lifestyles help millionaires get rich in the first place, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute and an author of "The Next Millionaire Next Door: Enduring Strategies for Building Wealth," in which she surveyed more than 600 millionaires in America.

During her research, she studied the characteristics most predictive of net worth and found that six behaviors, which she called "wealth factors," were related to net-worth potential, regardless of age or income. One of those is frugality: a commitment to saving, spending less, and sticking to a budget.

"Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income," she wrote.

Read the full article at The New York Post »
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