Early Retirement/Saving Money when Poor with Low Wages

Live and let live.  What someone does with their money is their business.  I have no skin in their financial decisions or dealings, nor do I care to.  I am interested in hearing things that others have done to make money, save money, and reduce spending.  Some of those things I will apply, some I will reject.  Bottom line is, I have one life, I'm going to live it as responsibly as I can, and I'm going to leave you to live your life as you see fit.  As long as someone doesn't try to interfere with my life, I'm happy to let them do whatever they want, and I expect the same.

I've made a lot of money mistakes in my younger years that cost me dearly.  I try not to make those mistakes today.  While I never got caught up in the rampant consumerism that seems to grip the USA, I have wasted my share of money on things that I regret.  I can't undo them, just learn from them.  We are actively adopting a minimalist lifestyle and find it very liberating.  Friends and family think it is a sign we are losing it now that we are over 60.  We don't miss eating out several times a week.  We don't miss buying stuff just to buy stuff.  We don't miss throwing out perfectly good linens because my wife let her cousin talk her into redecorating the bedroom and adopting a different color and design theme.  We don't miss paying for a storage unit to hold all the stuff that won't fit into our house.  Over the past few years I have become more conscious of being responsible not only with money, but with things that impact the environment and society as a whole.

You can start an investor checking account with Schwab for a relatively small sum.  From there, you can invest in stocks, bonds, money market.  There are lots of tools to help you make good decisions.  Sure, there is risk, but history shows that for every dip there is an even larger and longer rise.  Even if you are poor with low wages, you can still save and invest something.

We bought a new car with a warranty to use for commuting back and forth to work.  Sure, it lost "value" as soon as we drove it off the lot, but the value to me isn't just what the care is worth if I sell it.  Part of the value is in knowing that my wife is in a reliable vehicle that is safe and economical.  We don't have to worry about if we will make it the 150 miles to St. Louis, and we don't have to worry about a huge repair bill if something fails on it.  In a short time it will no longer be under warranty, so there are repair bills in the future I'm sure.  The car I currently drive is a 2003 with 230,000 miles on it, and I will drive it until it requires an expenditure more than what it is worth.  We will do the same with the car we will soon have paid off.  Once that car is paid off, I will put the payment into my investment account and let it grow until we decide we want to get a new(er) vehicle.  Yes, we did 72 payments, but at .5% interest it let me put almost $200 per month into a mutual fund that has been averaging a 10% annual return.  If you can borrow cheap and invest the difference, you can come out ahead compared to cash.  Another way to save money.

Here is an investing opportunity that is kind of rare but if you spot it grab it. Conditions:

* Cyclical stock, generally a utility stock.
* The price of the stock rises and falls on a yearly predictable basis.
* As an employee you can buy the stock directly at a discount.
* Sufficient market volume that sale is not a problem.

Again all the factors have to align but there are still companies like that out there. I worked for GTE in a prior life. The stock price was habitually low in November and highest in February. As an employee I could acquire the stock at 15% discount. I made a 30% return on every deal I did. If you work for a company that is on an exchange a call to HR might be in order. Then see if they match the conditions above.

Cyclical and seasonal stocks can be a good opportunity for anyone. Then use options to trade the time period so that you don’t tie up a ton of $ in the stock, and to amplify your return. Or, at least sells calls against the stock if you choose to buy shares.

There is one area of generating income that is often overlooked. Many people think they need a job and they need someone to pay them the money the want. It helps to take responsibility for building an income on one's own instead of relying on someone else. Paul mentions passive income. One example is taking time to research a topic and create an article to sell that can generate income over and over. As he also says, try 100 things. I have tried many business opportunities over my life. Some have been successful enough to produce ongoing income. Others worked for a short time, then the world moved on and the opportunity was gone. Some were bad ideas from the start but they gave me experience that worked elsewhere. The important thing and the toughest thing is to take action, look at the outcome and formulate the next action. It also helps to avoid following the herd but still watch what the herd is doing- look for a way to use popular ideas in a different fashion

Julie Reed wrote:Cyclical and seasonal stocks can be a good opportunity for anyone. Then use options to trade the time period so that you don’t tie up a ton of $ in the stock, and to amplify your return. Or, at least sells calls against the stock if you choose to buy shares.

The other way is borrow the money and use the stock as collateral. Back then the interest costs were deductible. I also held the stock for a 15 month cycle so that I could report it as long term capital gain.

THAT WAS THEN. THIS IS NOT TAX ADVISE. TALK TO YOUR ACCOUNTANT BEFORE MAKING A MOVE!

Jennifer Richardson wrote:
One is a financial independence framework based on very low, very concrete expenses. Say that I allocate myself $100 a month for food. That means that if I can save $2,500 and get a 4% return on it, I never have to work to buy that food month’s again (Note: multiply this by 12 months and never have to work to buy any food ever again). That helps with the discipline to save (small, concrete goal, easier to reach), and the discipline not to spend $800 a month on food (which I could do so, so easily), which would require saving $20,000 instead of $2,500.

It helps to have a tracker, to know exactly how much you are spending on food (or whatever). My friend the accountant introduced me to Mint, where all I need to do is link my bank and credit card accounts, and Mint keeps rack of every transaction, displaying them for easy view. If I set budgets, it tells me if I have exceeded my budget for that category. Best part: it emails me if something unusual happens -- that saved me a bundle one time, because my debit card got skimmed. Mint's email alert let me catch the theft by day two, instead of not knowing about it until my statement came out. The thief was draining me so fast, I probably would have had nothing left if I had had to wait for my monthly statement.

The most infuriating part is that it wasn't my usual bank where it happened. A certain roommate kept begging me to borrow money, but wasn't willing to drive to my usual bank. We went to a different bank I had never used before. He hasn't repaid the loan, either, so see if he gets anymore loans from me!

The second thing sounds kind of bad, but it involves cultivating a sort of protective arrogance. It is not how I really feel when I am being nuanced, and I definitely never apply these ideas to people other than myself, but it is a shell that I can put on and say, “I am not going to be a poor, unhealthy schmuck wasting my money on fast food because I am too lazy to cook. I am not so desperate to look attractive that I am going to drop money on new clothes and a haircut. I am not some fool who sits in front of the television like a sheep.” Etc. Basically I motivate myself by appealing to my own self-image as a disciplined, free-thinking, self-reliant, and determined person who would very much hate to think of myself as a weak, spoiled, lazy consumer who is just going to drop to her knees for her societal overlords. Also I imagine Diogenes and Seneca and some other Stoic philosophers judging me. It works for me.

It doesn't sound bad at all to me. I use the same technique. It is a very effective technique if you can do it.

Jay Angler wrote:
Similarly, so much of "charity" is not really about giving a "hand up". It's about puffing up the givers. If we *really* wanted to give people hope, we would support increases in minimum wage and require companies to offer affordable health and dental care to *all* workers, not just full time ones. We would support free/almost free adult education classes up to Grade 12 and subsidize skills and trades training entry level education. We would teach people how to grow their own food, and not put up road blocks that prevent them from accessing public land or telling them they can't plant veggies on their front lawns. We'd plant edible trees in our cities, rather than ornamentals.

Here is an essay I originally posted to Facebook in Honor of St. Stephen's Day, 2017:

'Good King Wenceslaus look'd out on the Feast of Stephen...''

That's today, December 26. The Feast of Stephen was traditionally a day of almsgiving and charity. I suspect it is the origin of today's concept of December as a ''season of giving.'' Which would be fine if it corresponded to a season of need.

We all know the ''Stone Soup'' story, right? People facing a food shortage, learning to share instead of hoard. All very well, but what if food isn't the need in short supply?

It is easy to donate food. The frequency of food drives attests to that. But what good is gifted food when you are already drawing foodstamps, but worried about making rent? Heaven help you if there is a housing shortage -- rents will skyrocket, and don't expect a heartwarming Stone Soup story about that!

I have seen the video on social media: freezing cold day, and someone gives a homeless person a hot cup of coffee. But as a regular coffee drinker, I can attest to one thing: coffee causes the bladder to fill very quickly. Have you ever been in one of those neighborhoods where every store and restaurant for blocks around has a sign saying, ''Restrooms for customers only''? What then of the well meant cup of coffee? The giver gets to walk away feeling all warm and fuzzy, and doesn't have to think about potentially putting the recipient at risk of arrest for urinating in public. That's a sex offense in some jurisdictions! Awww, but it's so much EASIER to provide coffee than a place to urinate afterward!!

And speaking of a place to urinate, perhaps you have been frustrated by a public restroom all out of paper? This could be the work of what is known as an ''urban hunter-gatherer.'' Someone goes into a restroom, winds a wad of paper around his or her hand, and pockets it. Now that family has a few days' supply. Toilet paper isn't food, so you can't buy it with foodstamps; but do any of you disagree that it is a necessity? On the same note, I am sure you ladies are only too aware that you cannot buy feminine hygiene products with foodstamps either. I have occasionally heard of drives for these items, but not nearly as often as food drives. After all, a can of soup is ever so much cheaper than a six-pack of TP.

I don't want to sound ungrateful. I have been a patron of food banks, and I appreciate the donors who keep the shelves stocked. I also appreciate the hardworking, unpaid volunteers there. Really, I do! It's just... well... if the items I received at the food bank have to be cooked in order for me to eat them, then I'd better hope my electric or gas bill somehow got paid! I can't very well cook over a campfire during the countywide burn ban, now can I?

Let's face it, people donate food because it is the easiest. Warm fuzzies on the cheap. I'm sure the writer of ''Stone Soup'' had his heart in the right place; I just can't help wondering how that story would be different if it was about a shortage of something other than food...

Jennifer Richardson wrote:
One is a financial independence framework based on very low, very concrete expenses. Say that I allocate myself $100 a month for food. That means that if I can save $2,500 and get a 4% return on it, I never have to work to buy that food month’s again (Note: multiply this by 12 months and never have to work to buy any food ever again). That helps with the discipline to save (small, concrete goal, easier to reach), and the discipline not to spend $800 a month on food (which I could do so, so easily), which would require saving $20,000 instead of $2,500.

I'm sorry to intrude, but is this hypothetical?  Is there actually a way to invest if you gather that $2,500 that you can take out $100 every month (if that's the earning you get) and use it, without decreasing your capital investment?  I don't know what sort of fund that would be.  

An investment that I could build up to and someday use to pay for my groceries would be a worthy goal for me, but only if I actually could get that extra money out every single month, and have access to the whole account if I needed to for an emergency.  (I'm sorry if this has already been covered in the thread!  I'm still reading through.)

Hi Lori, I think Jennifer is saying that $2500 would give $100 in interest at 4% rate of return but only once per year.  So to get 12 months of food from your investments, you'd need to put away $2500x12=$30,000.  

But that's probably besides the point.  I'm thinking that the "concrete goal" is to just save the $2500 with the realization that it generates $100 per year in food or booze or cat food or whatever.  If you say to yourself, what good is it to invest $2K, then you may not invest it.  On the other hand if you think of that as something that would generate real money each year, maybe you'd invest.

I always put away $250 per month for a "new car".  Other people around me would spend $500 on a "car payment".  In one year my stash was up to $3,000.  In four years I could get a nice car with $12K cash.  Once you start saving little bits, it grows a bit on its own but the power is in putting another bit in the next month, and the next, and the next.  

As to your practical question, there are investments where you can have a small pile of money and draw off the interest each month.  Millions of retirees are doing that on a larger scale.  So it's definitely there for larger amounts, smaller amounts are a bit trickier to find.  My example is that I have a high yield checking account that pays 3% interest.  So if I had $10,000 in there I could pull out $25 every month and the capital would remain untouched.

Lori, it is what Mike just wrote.  If you have $2500 invested in something that pays 4%APR that will be 4% per year which comes out to $100 per year on that $2500.  I actually really like how Jennifer framed that as it provides real motivation helping to make it look doable.  The one thing I'd add is that to really draw that $100 in interest off to use you probably want your investment to be something that either pays interest or dividends as opposed to something that appreciated 4% in value.  If it's just an appreciation, say in a stock price for example, then you have to actually sell something to get the money to use.

This is basically what I'm working to do, investing in things that pay actual money monthly or quarterly in interest/dividends.  Right now I'm averaging $350 a month income from these investments.  Meanwhile I'm working to get my bare essential living costs down to $500 a month.  Some months I make that, others I don't.  After I get enough data I'll decide if I need to adjust my monthly expense expectations, likely it will go up, but it might go down.  When the interest income equals or exceeds my expenses then I will have achieved at least a basic level of financial independence.  I will want to build a greater gap between the two for added security I expect, but that is my current goal.

A huge thing I've found that has helped me along my path to financial independence and saving money is something I haven't yet seen anyone mention until Jason just recently did.  This is TRACKING your money!!!  He talked about using a service like Mint, which I've heard about but don't really know.  It sounds like it could be very good for giving you the data to know just where your money is coming from and going to.  This is a major thing though it might not sound like it.  Of course, to be of any use you have to actually look at and evaluate the data too.  I use a different system, a scrap of paper I keep in my wallet and a pen.  With this low tech system I write down every penny that flows into my life, where it came from, and then where it all goes out if I spend it.  At the end of each month I tally everything up into the categories that I find useful for my life, which can change over time.  Then I convert it into hours of my life that I had to work to pay for the expenses using my real hourly wage.  Your real hourly wage is likely quite different than what you might think your hourly wage is.  You need to add up all the hours that really go into your job, including commuting, decompressing, etc. and then subtract all the expenses you have as a result of your job, such as transportation costs for that commute and all the lunches you end up eating out.  Divide the actual hours involved by the remaining money left over and you get your real hourly wage.  (hint, this is a good thing to do when evaluating any new job you might be considering too!)

The benefit I feel my paper and pen system of tracking has over automated system like Mint is that it does much more than just get me the data.  The real magic to me is keeping my attention and consciousness focused on the issue.  Those few seconds it takes me to jot down the expenses when I make them also causes me to remember that I'm going to be evaluating this all later, that I have a long range goal.  It absolutely stops me from doing any mindless spending.  Thus in what I've found to be a painless way I've learned to spend money on what gives me fulfillment and not on what I don't find worth the cost of my hours of life.  I get the more luxurious life without any added expense.

Earlier in this thread people were talking about low cost housing options.  I didn't see mentioned the route I took.  First I saved money while I was still living at home, when I was making very little money I should add.  I scoured the real estate ads in the paper, back in the days when such things existed, looking for cheap mobile homes in a mobile home park.  I was expecting to pay 4 to 5 thousand at the time, which I hadn't quite saved when I saw one listed for $1500!  I figured it would be the horror from hell, but decided to call and go see it anyway.  In fact it was just small.  It was a 10' x 50' in fine condition, with a new roof even.  The fellow who was selling it said his father who had recently died had lived there.  He had no use for it and thus was selling it.  The lot rent was about $200 a month, back when renting an apartment in the region was around $400.  I had the cash and I bought it, launching me into life on my own.  I worked minimum wage jobs, or nearly so, for several years saving all I could.  Those were years when I learned what poverty was.  It was about 5 years later I had enough money saved up for a down payment on cheap property.  It took 2 years of searching before I found what I wanted, a mobile home on land.  The goal was to do away with that monthly lot rent.  I saw many things some with 10 acres or more, some with less.  What I ended up with was 1.56 acres with a 600 sq/ft mobile home and lots of out buildings for $27,500.  I then sold the mobile home in the trailer park for the same $1500 I paid for it 5 years previously.  (That person ended up selling it for $2500 a couple years later.)  My mortgage on the property was a 15 year loan with a monthly payment of $262.20, slightly more than I was paying in the mobile home park.  There were more lean years as this was again just about my limit based on income.  Eventually I started making more money while keeping my expenses about where they were.  I poured the extra into the principle of the home loan and had it paid off in 9 years.  From there I have never paid a mortgage again!  Over time I've put a fair amount of money and sweat equity into this property, which is where I still live, transforming it from a thermal nightmare to an energy efficient homestead that costs me very little to maintain.  The best part is the township still thinks because it's a small mobile home that it has no value and thus my property taxes are still about $400 a year!  I love that part!

You might be thinking such a thing is no longer possible.  About this time last year I was seriously considering buying a place not too far away as an investment property.  While the property I was looking at ended up not being worth the $10,000 they were asking, there was a mobile home, in decent condition it seemed, just down the street on perhaps 1/4 to 1/2 acre for sale for $36,000.  I've seen things in my area go for $20,000 to $30,000.  What I did 20+ years ago can still be done today for the same dollar amounts!  It does take patience to find these deals though.  A mobile home on land can be cheap living and grand living!

Thanks for the answers and ideas about saving and earning money on that money.  :-)

I lived at home till I could (sort of) afford my small house.  I hope to have the rest of it paid off in 5 years.  (I've lived here for two already and it's taking longer than I thought it would to pay it off, because of expenses and income variability.)  I realize I'm very fortunate, & I should be able to live here much cheaper than I could rent anywhere near my family.  I have some savings, an IRA that is not very big right now, and a small, older vehicle.  I want to focus on getting the house paid off, but I'd also like to learn about investing at some point.  I'm not bad with money, but sometimes it's a little bit scary.  I've had panic attacks over money more than I like to think about--about doing taxes, earnings/spending, setting up sinking funds / retirement, etc.  

Money is an emotional thing as well, not just a math problem, and it's scary to think of failing at it.  I think I do all the basic things (like staying out of consumer debt), but there are plenty of areas where I still find myself confused at times.  I have a variable income so that makes budgeting a challenge and I feel it's important to have some savings because of that.  Also with my health there are certain corners I just can't cut.  Some folks can do a really bare bones grocery budget but that's not a place I'm at right now.  

I feel like I'm in a very good place considering, but that doesn't mean I always feel comfortable.  I wish money wasn't a frightening topic for me.  Even when I learn all I can, sometimes it just feels too hard, too confusing, too out of reach.  And I definitely feel like there is one set of rules for regular people, one set of rules for the powerful or extremely clever / techy folks.

I feel like if I could conquer the feelings around money, I'd be much better at it all, but as it is, I'm going a step at a time and doing small things right, hopefully getting better at bigger things.  :-)  I don't use apps, but I write down my bills and I'm trying to keep track of extra expenses every month, too.  (Vitamins, clothing, home goods, whatever I have to spend.)  I'm not even trying to budget my groceries right now, though.  That seems to be slightly beyond me at the moment.  I'm trying to stick with cash, but if I find something that's a good deal to stock up on, I will chose to do that, rather than obsess over strict numbers.  Just where I'm at with my health right now, I feel like eating healthy is more important than a strict budget.  Some people seem to be able to be pretty hard on their bodies nutritionally to save some money, and other folks are producing enough of their own food they can save a ton of money, but I'm not in either camp right now.  I really can't cut too many corners there.

(Again I know this thread isn't about me, but I wanted to share...  Also I'm really disappointed that 2,500 wouldn't earn 100 a month!  That sounded like a pretty great return, ha ha!)

As a white collar litigation lawyer I learnt how a lot of people in finance and business really make money. It’s by insider trading.

Any kind of ‘finance guru’ who tells you it’s easy to get rich if just buy some safe stock that’ll go up 12% a year, as a previous poster said, is a bit of a charlatan. Safe stocks rarely go up 12% a year. They barely move at all. Even 3% a year is lucky. The next trick they use is to look to some historic stock that unpredictably went up, then say “look, here’s proof that works!”, ignoring the many where it didn’t. There are exceptions but there are then other barriers to getting in.

Eg. Berkshire Hathaway is run by Warren Buffet- one of the world’s most successful investors, but you need millions of dollars to buy the minimum required. Today their stock are $329,229 a share. If you’re reading this post years after I wrote this then take a look at the current price and it’s pretty certain it’ll be higher unless there’s been a stock market crash, and it’ll still recover even if there is. But you need a few million to get the stock in the first place.

I think the best thing going into farming has taught Katie and I, is that money is not to be feared. I know that is a big issue for you Lori, and I am in no way diminishing the emotion aspect of what you say. I fully understand why people would feel that way. I am just grateful that I do not.

For Katie and I, we take risks, so we also reap some big rewards.

Here is an example of risks versus rewards. Katie and I do not have a mortgage on our homes, so we do not have insurance on them. That is a risk, but in the 9 years we have done this, we have saved enough money NOT buying insurance, to build a new home should one of our houses burns to the ground. If one did 8 years ago, yeah we would have been out a home, but it did not, so we played the risk and won.

But the biggest thing we have learned is, we will be just fine without money. Oh we make money, but the cash flow for us is very sporadic. That is hard living in a world that is used to timely cash flow. But no matter how much people scream and yell, Katie and I have learned that we drive the bus. They get paid, when we pay them...

The interesting thing about money is, it is 100% backwards of what people think. Everyone tries to save, save, save to get more money, and they scrimp, screw people over, and do the nastiest things for cash, but that is not how a person gets money...

You get money by giving it away!

You do not just run around and throw it out to anyone, but if people are in need, you give them money, and you know, you are richly rewarded.

Katie and I have learned this the hard way, and while it seems so logical to save money for the lean times, to get money in the lean times is to give money away when you got some extra. We have done this so many times, it no longer scares us to be without money. When we need it, somehow, some way, it will be there.

But it is not a flippant attitude, like, "Oh, we'll get money when we need it." It is not like that at all, it is looking around and seeing where the need is when we do have extra money, and giving it to people who need it more than us.

You have to experience it, to really appreciate it, but try it...give money away, and see how quickly it returns back to you when you are up against it.

Travis Johnson wrote:The interesting thing about money is, it is 100% backwards of what people think. Everyone tries to save, save, save to get more money, and they scrimp, screw people over, and do the nastiest things for cash, but that is not how a person gets money...

You get money by giving it away!

You do not just run around and throw it out to anyone, but if people are in need, you give them money, and you know, you are richly rewarded.

Katie and I have learned this the hard way, and while it seems so logical to save money for the lean times, to get money in the lean times is to give money away when you got some extra. We have done this so many times, it no longer scares us to be without money. When we need it, somehow, some way, it will be there.

But it is not a flippant attitude, like, "Oh, we'll get money when we need it." It is not like that at all, it is looking around and seeing where the need is when we do have extra money, and giving it to people who need it more than us.

You have to experience it, to really appreciate it, but try it...give money away, and see how quickly it returns back to you when you are up against it.

You know, I believe this.   There have been times in my life where I've been generous as I was able to be.  Frankly from the outside there probably looks like there should be no way I could have my own home at this point.  I was completely off the job market for about ten years due to health reasons... but somehow when the time was right, things worked out for me to have a job I could do from home, and save a lot of money, and get a home where I have cleaner, fresher air, and can plant some fruit trees.  It's a dream come true.  I do think some of it comes down to luck with having family support in ill health, as well as avoiding debt, but a lot of it just feels like...it came to me at the right time.  I really don't think it's just that I was so clever.  The right house, the right offer, the right real estate agent, the right help...it all came together for me.  I wasn't in a position to do ANY home makeover stuff...and I mean anything, not even painting...and the house I got needed literally nothing done to it.  It met a couple of other requirements that were really important for me for health reasons.  So...yeah.  I know very well this doesn't happen to everyone.  I really have always tried to give money to those in need when I possibly could, to the point where some would say I was being really dumb, I wasn't in that good of a place myself...but somehow things have really worked out well for me.  Luck, blessing, kindness returned...whatever it all is, I'm very grateful.  I hope I can remember to live that way in future especially, instead of being afraid about money.

The guy that invented and patented the Geodesic Dome realized this too. he could not explain it, but he would give his money away until it was almost gone, and when he thought he was in really deep trouble, someone would use his home and then cut him a check for royalties, so he could keep giving his money away.