Money to escape money: you need less than you think

“All I ask is the chance to prove that money can’t make me happy”

Spike Miligan

This is a post that I’ve been meaning to write for some time.

If you are interested in joining the leisure class you will need some seed funding. How to get it is up to you. How much you need…I hope I can help.

The simple steps to living simply are:

  1. Live very simply.
  2. Save all of the money you were spending living cluttered and complex.
  3. Put that money to work to escape the need to work.

Voilà you have left the working class and graduated to the leisure class!

Congratulations to you and the class of right now.

But, how much money do you actually need before you can turf in your job. Millions right, hundreds and hundreds of thousand at least?

Several years ago I did some planning for our retirement. At that time I worked out that we would need about $2,900,000 inflation adjusted, to live comfortably during 30 years of retirement. Simple math told me that the standard advice of saving 10% of our income was totally insufficient to accumulate $3 million before age 65.

After playing with the calcs I became frustrated. I rejected the idea of working my whole life away (to about 70 years old) in a McJob while living in abject poverty in order to enjoy a fabulous retirement. According to my math we needed to save 50% of our income to bulk up the retirement fund. At that time I just couldn’t envisage how we could live a good life on 50% of what we made. Then a simple thought dawned on me –  if we could save 50% of our income and if we could live on the other  50% then we would be earning two years of life from every year that we worked. That meant I could be free from work in half the time leaving me free to do something more fulfilling than often unethical work maximising shareholder profits.

I toyed with these calculations until I struck upon the idea that  if I did one year of work and saved 75% I could live for three years (75/25 = 3). Ah the beautiful math! Working backwards and making some assumptions (like I could live on 25% of my income) the maximum I’d need to work at that level would be 15 years and I’d have well over a million stashed away. Trouble was that this was even less to live on and hey I was the guy questioning the feasibility of living on double that – 50%. Math to be determined I resolutely closed the door on the consumer life. Whichever retirement future I was travelling towards ($2.9m or $1m or even a lot less) I could not afford to redistribute every pay check back to merchants and sellers of things. Working only to spend all of our money was the prescription of fools. A masterless itinerant man in my mind far better than being corporate tool. From this critical decision we have/are transitioning to a form of simple living akin to old skool husbandry that Virgil would have been proud of.

Our approach to simple living is enabling us to finally acquire the cash that we need to free ourselves from the constant struggle for money. So exactly how much money do we think we need now to escape from money (more accurately your willing slavery in your workplace)?

In my experience about 3 years worth of labour saving between 50-70% of your total income is enough to enable part time leisure status. Between 5 and 7 years if you are looking to withdrawn to your hamlet completely. That is a maximum of 7 years of hard labour for a life of total freedom. Of course you will never stop working entirely. You will work all of your life. If you live our version of the simple life you may find yourself working harder than ever! The key is that you now have the choice and your labour is of direct benefit to you so it is enjoyable. Stapling coversheets on TPS reports for 8 hours will never be as satisfying as 8 hours tending your vegetables, making chutney or brewing very bad beer.

The numbers are all relative of course. The actual figure being entirely related to your outgoings (or not) and any other sources of income, but here is the thing…If you can save 75% that means you are able to live on 25% so you only the dollar figure equivalent to 25% per year for however many years you plan to live (adjusted by 2-4% to cover the cost of living rises). When you do the math the amount of capital you need in your fund might be as little as 10% of what you think you need. For example we thought we absolutely must have $2,900,000 but really it’s more like $300,000 for us. Just $300,000 to join the leisure class permanently. This is one membership fee I will gladly pay.

I am very aware that most people will never consider voluntary simplicity. Others will not think $300,000 is sufficient for a good retirement. The irony of course is that they will likely work all of their lives and retire with a lot less. Most people retire without very much of a retirement fund at all and so retirement is an awful shock. Right at the time in your lifecycle when you are least capable of dealing with awful shocks!

My view is as always. You can look  at information and try to make it work in your situation or you can stand still, worry and cast stones.

Some of our friends like the idea, but feel it too much of a sacrifice to live on so little money. I don’t see living on a tiny household budget as a sacrifice anything like the sacrifice of my life in the enslavement to a silly job that I only do for money. I fear this sacrifice and believe it is far greater than baking my own bread instead of buying it from the supermarket.  In my case I’d unwittingly forfeited a decade doing errands for fools before I plotted my scheme so cunning you could put a tail on it and call it a weasel.

To become a corporate Houdini yourself simplify, simplify, simplify your life (thank you Thoreau one simplify is sufficient!). The less you need to pay for your food and shelter the less you need in your financial fund. You don’t have to be a vagabond and a beggar, but it sure helps if you don’t mind living like one. It isn’s a life of squalor and grime either. It is simply a life lived at the fashionable intersect of minimalism, frugality, husbandry and high finance.  This is your only life. Please don’t waste it all working for shareholders. Better to become a shareholder instead.

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