Extreme Retirement

I recently discovered this blog and found it fascinating (in a “Guinness World Records” sort of way).  The author is a 38-year-old Dane named Jacob Fisker who lives in the United States and has taken frugality and anti-consumerism to the extreme.  He claims to have achieved financial independence by the age of 30 and boldly states that he can help me (or you) retire in only five years–all we have to do is save 75% of our after-tax income.  Sounds crazy, but he’s written a book about his journey and provides extensive detail on his website as to how he was able to achieve this seemingly impossible goal.

Here are a few observations about Jacob that I found significant:

  • Spent between $5,000 and $7,000 per year for an entire decade
  • Earned less than $70,000 per year during those ten years
  • Married, no children
  • Rides a bike, walks, or takes public transit
  • Recommends spending $200-$300 per month per person for living arrangements
  • Values experiences over things

Before you dismiss Jacob as nothing but a financial masochist, he does seem to have plenty of interests and hobbies.  He spends a relatively significant amount of money on martial arts training, has a goal of cycling across America, and stays current in geopolitics.  Recently, he accepted a quantitative trading position because it sounded like fun.

I’m not suggesting this is a lifestyle for everyone, but I enjoyed discovering his solution for a problem that most Americans struggle with on a daily basis–overspending.  As much as I value the concept of living a financially responsible life, I occasionally like to treat myself to certain things and experiences that happen to be expensive.  Let your income and financial plan dictate what is a healthy balance!

The primary tenets of his philosophy apply to everyone, regardless of income level:

  1. Financial independence is more easily obtained by finding ways to control expenses than by trying to increase income.
  2. A happy and fulfilling life can be achieved with much less money than is commonly assumed.

Jacob provides a “21-Day Makeover” for anyone interested in taking the concept of early retirement to the extreme.  He makes some interesting points which I found thought provoking.  See what you think…

  • Live close to work.  Not only does this reduce transportation costs, but it can improve quality of life and create a more tight-knit sense of community.
  • Join a challenge.  Examples might include, “buy no clothes for a year”, “live without a car”, “spend less than X dollars per month on food”.  Always working towards some type of challenge is motivating for me.  I use personal challenges all the time in order to achieve big goals.
  • Find a free hobby.  Learn a language, develop a new skill, volunteer.
  • Rethink groceries.  Consider giving up meat and dairy for a period of time.  The majority of the world survives on beans and rice.
  • Increase deductibles.  Insurance should be used to protect against catastrophic events.  Set up an emergency fund, raise your deductibles, and watch the premiums go down.

We would love to hear your thoughts after visiting Early Retirement Extreme.  Do you think he offers any valuable takeaways?  Or is he just plain nuts?