[-$94,900] Debt Payoff vs. Retirement Savings (Part 2)

home farm singapore retirement community

An architect’s visualization of Home Farm Image: SPARK Architects

My Hazy Retirement Goals

In my last post -Part 1– I wrote about my back and forth struggle between allocating money toward debt payoff vs retirement savings. Hmm. What are my retirement goals? I’ll have to dedicate a separate post to this another time, because I haven’t thought it through yet. I only have hazy visions.

I’d like to marry rich and retire instantly. Ha. Wouldn’t we all, right? Short of a miracle like that, I’d like to plan to keep working for another 10 years in my industry at maximum salary and maximum savings. Around the age of 50 (or whenever I get laid off and can’t find more work or get burned out beyond repair), I’d like to go into ‘working retirement’ (financial freedom) for another 10 years until Read More

[-$97,079] Debt Payoff vs. Retirement Savings (Part 1)

debt or retirement path

A Shift in Strategy

Once I killed my credit card debt and could focus on my student loan debt, my intention was to throw every spare dollar I had at it, to the exclusion of everything else. I planned to keep my retirement savings down to 5% to get my employer match. Lately, I’ve been reconsidering that position.  Read More

Extreme Saving and Early Retirement

mmm financial independence chart

Image Credit:  andhigherstill.com

Are financial freedom and financial independence still possible for me? Are they possible for you?

I’ve started thinking that once I’ve eliminated this mountain of debt, I could keep my savings rate high for a few more years to try to do some catching up on retirement savings. I know its too late to catch up to 20 lost years of compounding interest. I know that Financial Independence (complete retirement) may never be possible, but at least I could get to place of ‘Financial Freedom’ (aka ‘working retirement’) within the next 10 years.

Meaning that I’ll have to keep working after 50, but I can work where and how I want, knowing that I’ll have enough return from my investments to always have money to afford a basic place to sleep and food to eat. No staying at a terrible job out of desperation. For example, once in Financial Freedom, I could do contract work for 6 months each year and then travel and relax the other half of the year, or get a job overseas, or take a lower paying job in a cool environment with less stress, or hell, work for myself. It’s easy to get giddy at the possibilities.

What do I mean by Financial Freedom and Financial Independence? The image below shows my (over)simplified definitions.

Freedom vs independence

Image credit: doubledebtsinglewoman.com

 Image term definition: * FU Fund = F@%% You! Fund – This is the money that you keep in savings to protect you if your good working environment suddenly becomes toxic/unstable/etc., and you have to leave before lining up another job.

Want to learn more about extreme saving and early retirement?  Two of the best known sources on this topic are Mr. Money Mustache and Jacob @ Early Retirement Extreme. Both of these men ‘retired’ in their early thirties as a result of living on little and saving a lot.

Mr. Money Mustache:

The Shockingly Simple Math Behind Early Retirement

Getting Rich from Zero to Hero in One Blog Post 

How I Retired at 32 (Yahoo Finance Article)

Jacob @ Early Retirement Extreme

 How I became financially independent in 5 years

How I live on $7,000 per year

As you can tell, Jacob is the more extreme of the two. Both of them have great information-packed sites including forums and other resources.

Could I save 75% net income for 7 years to reach Financial Freedom?  I’ve seen this table in a few places online, so I’ve re-created it here.

Retirement Chart

At this savings rate, I could be out of debt in 3 years, and ‘working retired’ (financial freedom) 7 years after that at 50 years old. Wow!  Is this even possible for me? Right now my living expenses account for about 23% of my net income per month for a 77% savings rate. Yes, it is possible with sacrifice. Is this reasonable for me over the long-term (several years)? Hmmm.

Therein lies the rub. At this rate I don’t know if I will last in this career for 10 years. I don’t even know if I’ll last in this job for another year. The last few months have been quite stressful. I don’t know what the future holds. Even so, it’s still a goal to aim for and food for thought.
Anyone else consider extreme saving for early retirement?


“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)