I’ve lived extremely frugally for years now.

A thoughtful approach to spending has been a key component to the overall lifestyle that has allowed me to retire decades before most people.

If you’re not familiar with my story, I retired in six years on a $50k salary — going from below broke at 27 years old to retired at 33.

But nothing I did is off limits to you or anyone else.

[ad#Google Adsense 336×280-IA]Everything I did (and still do) to save money can be replicated by anyone.

To prove that point, I’m going to discuss five real-life changes I’ve made over the years to my own spending.

These five changes are going to be explored over a five-part series of articles. You can read Part 1 here and Part 2 here.

This article is Part 3 of the series.

Before we begin, I’m going to note that most of the changes I’m going to discuss could be thought of as extreme.

But extreme results oftentimes require extreme measures.

If you want to retire decades before most people, you’re probably going to have to operate way outside the norm. As you can probably already tell, this series isn’t going to be talking about just “cutting out the daily latte”.

So I’m going to show you, via real math, what the implications are to making these changes, and how these methods can lead to real and lasting wealth for anyone.

This real and lasting wealth can then be used to generate the passive income necessary to quit your job and live life on your terms.

So if you’re serious about retiring early – I mean, really serious – consider implementing some of these real money-saving ideas in your own personal budget, which could substantially speed up retirement.

Money-Saving Method #3: Stop Spending So Much On Housing

Housing is one of the three spending categories that I call the “big three”: housing, food, and transportation.

These are the “big three” because, together, they account for the vast majority of an average person’s spending.

As such, it makes sense to focus most of one’s energy on these three categories, rather than take a bunch of time focusing on little things like finding the best deal on gas.

Indeed, the Bureau of Labor Statistics (BLS) notes that housing, food, and transportation combine for over 62% of the average consumer unit’s annual spending.

And it’s housing that’s the biggest budget buster of all.

So we want to attack this one spending category more than any other.

Now, I can be a bit extreme in my ways, guys.

But I also retired extremely early.

In fact, I gave my old boss my two-week notice back in mid-2014, just before my 32nd birthday.

And my passive income started to exceed my core personal expenses at 33 years old.

I wake up without an alarm clock. I have no boss (except for myself, but I’m a great boss). I do what I want, when I want, with whom I want.

But this didn’t come about easily. And I certainly don’t live in a mansion.

When I first awakened to how much I was spending, back in late 2009, I realized that housing was my biggest spending (and problem) area, which is the same for most people.

As such, this is one of the first things I started to really think about in terms of how I could cut it.

Before we begin, let’s consider the numbers.

The BLS shows that the average consumer unit spends $18,409 per year on all housing-related expenses.

That’s over $1,500 per month.

I don’t know where you’re living, but that’s a lot of money to me.

In fact, that’s about three times my monthly rent.

I’m spending less than $600 per month on all housing expenses. That’s everything: rent, utilities, etc.

The difference is over $11,000 per year!

Want to know just how much money that is?

Saving and intelligently investing $11,000 pear year could literally change your life.

Let’s say you start with zero dollars. You invest this money for 20 years. Let’s also assume you could achieve an 8% compound annual rate of return over that 20 years (not that hard, considering it’s well below the average rate of return for the stock market over the long run).
We’ll ignore taxes and inflation for the sake of brevity.

Even if you start from zero, that money would turn into ~$540,000.

That’s over half a million dollars. Starting from zero. Like I said, life-changing money.

And all you have to do is avoid spending the average on housing.

So what do I do?

I live in a small, modest apartment.

It’s two bedrooms. Under 1,000 square feet. My significant other and I share the place with her younger son. We also split the rent.

We have no stainless steel appliances. No granite countertops. No crown molding.

What we do have, however, is a good roof over our heads. We have appliances that can keep our food cool and cook our food (when we’re ready to eat). Our air conditioning keeps us cool in the summer. Heat keeps us warm in the winter. The front door has a lock, keeping out would-be intruders. The floors sport worn but comfy carpet. It has all the appropriate accouterments that we need to live modern, quality lives.

Anyone who would walk into my apartment would not think I’m very wealthy.

Yet I control a portfolio of high-quality dividend growth stocks that’s worth well over a quarter million dollars!

Instead of spending my money on big house that I don’t need, I spend it on high-quality dividend growth stocks that generate enough (growing) passive income to pay my bills.

And pay my bills they do: the passive income I earn covers my core personal expenses.

That’s right. I’m retired in my early 30s.

The average size of a newly-built home hit a record 2,600 square feet just recently.

Does the average family really need 2,600 square feet?

What does a family really need 2,600 square feet for?

In my opinion, a big house is nothing more than a giant prison.

It’s a place that imprisons you to the work-earn-spend cycle that will keep you working to earn and earning to spend for the rest of your life.

So many people have these castles.

Yet they’re never home.


Because they’re spending all of their available free time at work.

The average size of a new single-family residence in 1950 was under 1,000 square feet.

It’s now more than 2.5 times that large.

Are people now 2.5 times larger?

Were people in the 50s tiny people that were okay living in tiny homes?

Of course not.

My best tip for spending less on housing is to downsize your home.

Easily said, but hard to do in real life.

But retiring really early is the same: it’s easy to talk about, but hard to do.

Look, guys. We don’t need 2,600 square feet. Unless you’re housing the circus while it’s in town, you just don’t need that much space.

Take whatever size your home currently is and start to think about cutting it in half.

You know what gets cut in half when you cut your housing in half?

Your mortgage or rent. Your utilities. Your spending on furniture to furnish the place. Repairs. Upgrades.

Said another way, your overall housing spending will go down dramatically. You’ll see a drop that’s pretty commensurate with the drop in the size.

Like I noted earlier, I’m spending about 1/3 of what the average consumer unit is on housing. But I’m also living in a place that’s about 1/3 the size of the average new-build SFH.

Of course, I’m also retired at an age that’s about 1/2 of the average person.

You can see how this all works together.

To be fair, I split the rent with my significant other. The rent is about $1,000 per month all together. Even so, this is significantly less than what most people are spending on housing. Consider, too, that I spend $0 on repairs, maintenance, or upgrades.

Downsize your housing and you’ll see that your housing expenses are downsized.

With that, the number of years you’ll need to spend in your life working will also be downsized.

Think about your money. And then your money will think about you.

Click here for Part 4.

— Jason Fieber