Retire by 40? 3 Couples Share How They Plan to Make It Happen
“We Want to Retire in Our 30s and Live Off Rental Income”
Who: John and Melissa Steele, both 26, real estate sales associates, San Diego
Our Early Retirement ‘Aha!’ Moment: “The lightbulb moment for Melissa and me came when we were both working at a large bank in Buffalo, New York, right after college.
Many of our co-workers were older and had been working there for many years. Seeing how unhappy they were made us realize we didn’t want to be 55 and stuck in a job we hated just because we were close to retirement.
We realized it was important to take control of our lives now—and that included working for ourselves. So two and a half years ago, we moved to San Diego and started our own real estate company, Steele San Diego Homes.
Our goal is to be financially free enough to explore other interests and travel the world—hopefully by our 30s. So it’s retirement in the sense that we’re free of the rat race and able to live off passive income from real estate investments.
Our Frugal Moves: We have no debt, and share the one car we own.
Our largest monthly expense is food at around $2,000. Melissa has some health issues, so we buy healthier food that costs substantially more.
But, as a result, we cook and prepare almost every meal ourselves, and rarely eat out. I bring lunch to work every day. And neither one of us drinks coffee or has any other daily spending habits.
A lot of how we save is by ensuring we’re getting the best value for our dollar. We canceled cable three years ago, opting for Netflix. When choosing an apartment, we factored in amenities like a parking spot, commuting costs and a gym—ultimately choosing the place that would save us the most in cost of living over time.
And when Melissa wanted to buy a Vitamix, she spent six months debating whether the purchase would be worth it. Now it’s an appliance she uses almost every day.
We also do a lot of selling on Craigslist and eBay to make back some money. Anything we no longer use, we put up for sale. And I do mean anything.
When we moved to San Diego, we sold everything: our house, our car, even our sheets. The only thing we threw away was a broom! And we do a purge of our apartment every few months, when Melissa sells or donates anything we no longer need.
The Impact on Our Nest Egg: Our two biggest expenditures are groceries and rent, which run about $3,500 a month. Our cost of living was much cheaper in Buffalo, but even so, we’ve managed to keep our monthly spending the same—between $4,000 and $5,000 a month total—by remaining frugal.
We just paid for our wedding out of pocket, so right now we have only about $20,000 in regular savings and another $10,000 each in our old 401(k)s. But since we’re relying on rental income to get us to retirement, we’re most focused on our net worth, which is currently over $350,000.
That includes rental properties we own in Tennessee, through which we earn more than $1,200 a month without doing a thing. Because we live frugally, we don’t touch that rental income—funneling it back into paying down the mortgages quicker.”