Early retirement – how do you reach it?

Do you often dream about quitting your 9-5?

What it would feel like to hand in your resignation letter to your boss. Walk out of the office and not come back. Never again having to work 50-60 hours per week for someone else’s bottom line. Ask for permission to take the week off. Always have a smile on your face even when you’re tired, stressed or depressed.

And instead, have the time to spend with your familly and friends. Explore and grow. Work on projects you care about. Because you’ve retired early. And you can live life on your own terms without having to work for money.


A few months ago, I was listening to a podcast episode interviewing a young lady who retired at the age of 33 – only having worked for 5 years.

She said she read a book about how to retire early and literally followed the steps.


This book sounded familiar. I read about it from a blogger who also retired by age 30. When I had initially heard it, I put it on my “to do list” at some point in the future. Hearing about it twice, I figured I’d google it and read reviews.

This is a wonderful book. “It can really change your life.” – Oprah

The seminal guide to the new morality of personal money management.” – Los Angeles Times

The best book on money. Period.” – Grant Sabatier, founder of Millenial Money on CNBC Make It


I found out that the original was updated recently.

Now seemed as opportune a time as any to read this book so I did.

Now that I’ve read it, I wish I read it earlier. I know I have to read it again. More slowly. Place post-it notes in the areas that I want to come back to again and again. It’s that kind of book.

It has changed my outlook on money and jobs, and given me new goals in life. This book is actually the catalyst for this blog. It’s fitting this is the first post on this blog.

I now recommend this book to everyone I know. I genuinely believe it is one of the best personal finance books ever written.


How to Retire Early

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The book I’m talking about is Your Money or Your Life.

Many personal finance books talk about saving and investing tips and how to get more money. While this book contains these elements, it’s also a guide on how to reach financial independence.

How to quit the 9-5 daily grind. And have the time to do what’s meaningful to you. Because more money is not necessarily the goal. The goal is living a more happy and fulfilling life. Because you only have one life with a set amount of time. While money is infinite, time is not.

Financial independence retire early (FIRE) is a trending term.

If you haven’t heard it before, it’s the idea of reaching a point where you no longer have to work for money. You can spend your time pursuing your dreams.

When I first heard about the movement, I was enamoured by it. It’s exactly what I want to do, but I didn’t know the first thing about how to achieve it. This book shows you the way.


(You can listen to this book for free through Audible’s 30 day FREE trial, which gets you 2 FREE books! Audible,an Amazon company, has the world’s largest selection of digital audiobooks. Even if you cancel within the free trial period, the books are yours to keep!


Your Money or Your Life is a step-by-step guide.

It breaks everything down to a specific, measureable and achievable action.

If you’re like me and you excel when there are a set of practical instructions, this book might help you too. I didn’t follow every instruction, but I did follow the majority and got lots of value from it – more on that below.


There are real success stories.

It’s not just a book with theoretical steps, it’s filled with personal stories about how real people have actioned these steps and achieved success. That’s where the value lies.

Some of the stories are from people who have read the book and applied it in their life.

Some of the stories are from the authors. Joe Dominguez’ and Vicki Robin’s have decades of experience living this way of life. Dominguez, a successful Wall Street Analyst who retired by 31, shared his experiences and philosophies with Robin.

Robin, a Brown University graduate working in film and theater in New York, recognized the value of Dominguez’ story and applied it in her own life. Dominguez died of cancer in 1997, but his work lives on.

Robin updated the book recently to reflect the changing times. She also added a new tool called Money Talks – mentioned further below.


Here is an overview of the 9 steps to achieve financial independence and the Money Talks section in Your Money or Your Life and how I actually applied it.


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1) What is your current financial situation?

  1. Calculate how much money you have earned in your lifetime
  2. Calculate your net worth = assets – liabilities
  3. Compare your lifetime earnings to your net worth

Getting the reality check of what your financial status is can be overwhelming if you’ve never done it before. Take your time with this step. Calculating your net worth is important because you need to know your bottom line so that you have a jumping off point to your freedom number.

To calculate how much money I’ve made in my lifetime, I just looked at my current and previous resumes and did a rough estimate. I didn’t calculate every paycheque like the book suggests.

The whole process took me less than 5 minutes. When I arrived at that number, I was shocked and sad. Having previously calculated my net worth, I had a basis for comparison. If I had been more knowledgeable about my finances from the beginning, I could have retired way before my daughter was born.

I should mention that in my net worth, I didn’t include fixed assets like items in my house such as area rugs and decorative light fixtures which the book advises adding in.

However, I did take a good look around the house to see what I have. Having actively sold items in my house over the last few years, I had a good idea of how much things sell for on sites like eBay, Kijiji, and Facebook Marketplace.

I realized I have way too many possessions – many of which I’m not even using. If I liquidate even 25% of these items, that cash flow would bring me so much closer to my end goal of financial independence.


2) “Being in the Present – Tracking Your Life Energy”

  1. Calculate the costs in time and money for your day job
  2. Compute your real hourly wage – how much money you are actually making

This can be an eye-opening exercise.

Say you make $35/hour and then you factor taxes and work-related costs like commuting and work clothes, but also entertainment and vacation to relax from work etc. Your real hourly wage might be closer to a much lower $10/hour.

When I did my calculation, it made me question if my current job is right for me. It’s so easy to stay in the same job and company. You don’t stop to think about how much it’s costing you – both your time and your money.


3) Monthly Summary of How Money is Coming In and Going Out

  1. Calculate your monthly income and each of your expenses – separate them line by line
  2. Create spending categories like food, housing, clothing etc.
  3. Categorize each of your expenses
  4. Calculate how much “life energy” you’re using for every expense
  5. Calculate your net income

Using the example above, if your real hourly wage is $10/hour and say your mortgage is $2000/month, that means it costs you 200 hours per month to live in your house. If you’re working the standard 40 hours per week, you realize that every hour you work is going towards paying down your house, which forces the question, is it worth it?

When I did this exercise, I was surprised to see how much money each month goes towards housing. I do live in an expensive area. But do I need this much house? Do I need to stay in this area?


4) What is “Enough”?

  1. Review each expense and question if it’s worth it – if you received true satisfaction as compared to the amount of life energy spent
  2. Understand if each expense is aligned with your end goals
  3. Understand how the expense would change if you became financially independent

In this step, you think about what your purpose is in life. You then critically analyze each expense to understand what’s genuinely fulfilling and contributing to your life purpose as opposed to your needing to consume or meet others’ expectations.

You understand what “enough” is. Going through this step, I realized something that’s been hard to admit to myself. I do some things to please others. Because I see others do it. It’s for validation. For acceptance in their eyes. It’s not true fulfillment. It’s something I need to work on.


5) Make a Picture of your Finances

  • Make a graph with lines for your monthly income and expenses.

Having a visual representation of your financial situation not only allows you to keep track of your progress, but is also motivating and keeps you accountable.

After reading this step, we even went so far as to share our stock portfolio with our family. It was difficult at first to put it all out there in an excel sheet – with all the red loss numbers for judgment and scrutiny.

But then we realized, we are all just learning. We made mistakes and we learned from them. Sharing our financial situation was liberating. Our family was only supportive and gave us tips to help us.


6) Embrace Frugal Living

  • Minimize your expenses by thinking about whether you really need an item before you purchase it

This step explores ways to bring your expense line down like wearing things out completely before replacing them (e.g. using a cell phone until it no longer functions as opposed to upgrading to the newest model every year).

An interesting part about this step is realizing how living a more frugal life also serves to lessen your environmental footprint. Saving money means saving the planet. Because every time you spend money, you are consuming resources.


7) Make the Most Amount of Money in the Least Amount of Time

  • Maximize your income by valuing your time and seeking the highest pay possible for your time

This step redefines the idea of work. It opens up so many ways you can make money that might be more fulfilling or pay you more per hour than what you would make in your day job.

This book mentions that we often think we are our jobs; when people ask what do you do, we respond with what our day job is. We value our paid work. In this step, I realized about the importance of unpaid work as well as fun activities that you can also do for work – it’s opened up more opportunities.


8) What is your Crossover Point?

  1. In your graph, add a monthly investment income line
  2. Estimate the crossover point between this line and your expenses line

At this crossover point, you will have enough passive income to become financially independent. This was a real nugget! This gives you an end number so you know exactly how much you need to reach financial freedom.


9) Where Should you put Your Money for Long-Term Financial Freedom

  • Understand where to put your money as you go beyond your crossover point

When you achieve your crossover point, it’s important to be able to invest your money so that it can produce enough income to support you for your lifetime.

This chapter talks about different investment techniques you can explore. I got a lot out of this section. While the section discusses investment techniques available to protect your money after you reach the crossover point, I found the ideas useful for thinking about where to invest my money now in order to accelerate my financial goals.


Money Talks

As noted above, this is the new tool in update. Money can be a taboo subject amongst family and friends.

At the end of each step are “Money Talk Questions”, which offer a way to explore money – its perceptions and realities – with others.

There are many great money talk questions in the book. Here are some of my favorites. The author suggests adding “Why?” and “How has society shaped my answer?” to any question to take the discussion further and deeper.

  • “Who gave you your first lessons about money?”
  • “Describe your relationship with money in five words or less.”
  • “What question would you most like to ask a friend about money? An expert? A relative?”
  • “What do you want for your children/loved ones that money can buy?”
  • “How much money do you need to be happy?”
  • “Talk about one thing you own that you love. What do you love about it?”
  • “What do you like – and dislike – about the work you do for money?”
  • “If you didn’t have to work for a living, what would you do with your time?”
  • “What does financial independence mean to you?”

I have used the money talk questions on a regular basis. I started discussing these immediately with my husband. We then discussed them with our parents and siblings.

Not only did it introduce a new topic, but it inspired deeper and meaningful conversations around the dinner table.

Final thoughts on how to reach early retirement

If you’re interested in pursuing financial independence, I highly recommend you read this book at least once.

Take your time understanding the details and doing the activities. You’re in for a transformational journey. Happy reading. Check out Your Money or Your Life HERE.

In case you missed it above, you can listen to this book for free through Audible’s 30 day FREE trial, which gets you 2 FREE books! Audible,an Amazon company, has the world’s largest selection of digital audiobooks. Even if you cancel within the free trial period, the books are yours to keep!


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How to retire early


Early retirement – how do you reach it?

Your Money or Your Life - How to Reach Early Retirement in 9 Steps