2784: How To Retire Rich Without Lighting The World On Fire by Lisa Harrison of Mad Money Monster

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[00:01:05] This is Optimal Finance Daily Episode 2784 – How to retire rich without lighting the world on fire, by Lisa Harrison of madmoneymonster.com. And I'm your host and personal finance enthusiast Diana Merriam. We're going to jump right into today's post as we optimize your life.

[00:01:29] How to retire rich without lighting the world on fire, by Lisa Harrison of madmoneymonster.com. With all the buzz these days around climbing the corporate ladder and starting businesses, it's easy to think that building real wealth is reserved for a privileged few.

[00:01:48] I'm here to tell you that that is simply not true. So if you tend to think you'll never become rich because you have no plans of lighting the world on fire by creating the next Amazon or

[00:02:00] Snapchat, this post is for you. If you're new to the blog, you need to know that my husband, also known as Mr. Madmoneymonster and I didn't start getting our financial act together until

[00:02:13] we were out of our 20s and well into our 30s. Mr. Madmoneymonster was a teacher for years until he left to pursue his passion in a different industry altogether. And I've worked in corporate America since graduating college. Our incomes are above

[00:02:30] average, but we're certainly not making investment banker wages here. In fact, Mr. Madmoneymonster's income is variable and unpredictable. My income is more predictable and also comes with the added bonus of health benefits and all that good stuff. All that to say, we're pretty normal. Up until a

[00:02:50] few years ago, we still had car loans, student loan debt and credit card debt. Then something changed. We found the fire community. Fire as in financial independence retire early. We were introduced to the idea that early retirement is actually within reach for

[00:03:08] almost anyone earning a decent living. Hey, we were earning a decent living. So we took a hot second to consider if financial independence was a good fit for us. We decided it was and a blog

[00:03:20] was born. I started Madmoneymonster to keep us accountable and entertain a few souls along the way. I'm hoping my mission is being accomplished. Feedback appreciated, but not expected. With all that said, I'm here to talk about how we are achieving financial independence without lighting

[00:03:39] the world on fire and how you can too. How many times have you heard stories about your grandparents walking to school in the snow uphill both ways? Have they regaled you with tales of sewing their socks when they had holes or eating large sandwiches? Come on, that wasn't

[00:03:56] just my grandparents, was it? At any rate, the point I'm trying to make is that in order to become wealthy, regardless of how much money you make, you absolutely must live below your means. Stop

[00:04:08] comparing yourself to the Joneses and their new BMW. In case you weren't aware of it, the Joneses are broke. If you ever want to build significant wealth, you need to widen the gap between your

[00:04:19] income and expenses and then buy assets with the difference. Pretty simple really. You just have to do it, like Nike says. Increase your income. Okay, I understand that widening the gap between income and expenses isn't always possible without increasing how much you make. Although I love

[00:04:38] watching my pennies, I also admit that there's only so much frugaling that can be done until you just need to earn more money. So do that. There are a few ways you can increase your income.

[00:04:50] Ask for a raise and you just might get one as long as you deserve it. Take a different job within your current company. Look for a different job at a different company or within a higher paying

[00:05:01] industry. Or work a second job or start a side hustle. Eliminate your debt. Another thing you can do to widen the gap between income and expenses is to kick debt to the curb and keep it there.

[00:05:15] It's impossible to build wealth when you're paying double digit interest on stuff you bought two years ago. Try frugality on for size. It's no surprise that we love, love, love frugality in our mad money household. It's one of the most important tools we have in our financial arsenal.

[00:05:34] By optimizing our expenses, we've been able to widen the gap more than we ever imagined. With the difference, we invest in low-cost index funds to help us build wealth. Over the years, we've adopted a selectively frugal lifestyle. What the heck does that mean? Oh, I'm

[00:05:51] glad you asked. That means we're mostly frugal. We're also willing to spend our money when we truly value something. We truly value time together and our home. Because of that, we're willing to be

[00:06:03] a little less frugal when it comes to family vacations and making purchases for our home. It's highly possible your version of frugality will be or is vastly different from ours. And that's okay. Incorporating frugality as a part of your overall financial independence plan, no

[00:06:20] matter how you do it, is highly recommended if you want to be rich without lighting the world on fire. Stay married and stay put. Now, I know this one is sometimes out of your control, but studies have

[00:06:32] shown that divorce can be really expensive. Studies have also proven that buying and selling several houses can really rock your bottom line over the course of a lifetime when you factor in transaction costs, realtor fees, and moving expenses. The best thing to do for your overall financial

[00:06:50] health is to stay married and stay put. I cannot emphasize enough the importance of choosing the right partner when it comes to your money. And I'm talking from experience here. I've chosen poorly

[00:07:02] in the past and it cost me a whole bunch of money and time, both of which I will never get back. Same thing goes for your home. Why buy a starter home if you know you're just going to upgrade in a

[00:07:14] few years? Just wait, save more money, and make your first home purchase your forever home. Short of having to move for a job or family, staying in one house will do wonders for your

[00:07:25] finances and your family. By tweaking a few areas of your life, you'll set yourself apart from the crowd. And even though you might never make investment banker wages, you'll still be able to finish rich. You just listened to the post titled, How to retire rich without lighting the

[00:07:46] world on fire by Lisa Harrison of madmoneymonster.com. And I'll be right back with my commentary. Have you been frustrated with personal finance apps that are cluttered with ads, difficult to use or rarely updated? So was Monarch. They built a new kind of personal finance app

[00:08:03] that's intuitive and powerful, ad-free and constantly improving based on customer feedback. Maybe you're saving for a down payment, a wedding, a dream vacation, your kid's college. I found that Monarch makes it so easy to help you reach your financial goals, whatever they are.

[00:08:20] I definitely wouldn't be able to allocate my finances or plan as clearly without help from Monarch. In fact, Monarch is the top rated all-in-one personal finance app. It gives you a comprehensive view of all of your accounts, investments, transactions and more. Create custom

[00:08:36] budgets, set goals and collaborate with your partner. And now get an extended 30-day free trial when you go to monarchmoney.com. After trying out Monarch for myself, I understand why it's the

[00:08:48] top rated personal finance app. And right now get an extended 30-day free trial when you go to monarchmoney.com. That's M-O-N-A-R-C-H-M-O-N-E-Y.com. For your extended 30-day free trial. Many people assume that to retire early, you must earn a high income. But I find that the

[00:09:12] concept of FIRE is pretty agnostic when it comes to income. The only thing that really matters is that you spend less than you earn, which is of course easier if you make a higher income.

[00:09:23] It's all about the balance between expenses and income. The person who can live on 25 grand a year and saves 25 grand a year, retires in the same amount of years as the person who needs 50 grand

[00:09:37] a year to live and saves 50 grand a year. I think the main challenge of pursuing FIRE on a lower income is that many people would not enjoy the lifestyle involved. The question of FIRE is a

[00:09:49] simple math problem, but how you derive enjoyment out of life is a much more complex question. However, there are tons of examples of everyday people doing this. One of the most popular speeches from the Economy Conference, which is an event I produce, is from Jackie Cummings Kosky,

[00:10:07] who got up in front of hundreds of people and shared her real numbers on how she retired in 10 years. What was so compelling about it was that she was 38 when she got started, and she was a

[00:10:19] single Black mother making less than six figures. She did that speech just as she pulled the plug on her career at 49 years old. And you can check it out now on the Economy Conference YouTube

[00:10:31] channel. But that'll do it for another edition of Optimal Finance Daily. Thank you so much for subscribing or following the show and sharing with others. Have a great rest of your day, and I'll see you tomorrow where your optimal life awaits.