Although I spent most of what I made when I was younger, I’ve always avoided debt like the plague. I’ve also been fortunate to have received some money from my family. For the past six or seven years though, I’ve been aggressively reading about finances and investing, and saving money for such.
We only have one salary which is a teacher’s salary in Taiwan, i.e. bugger all. We save more than 60% of it, although there are certain annual costs, so maybe it’s more like 50% (some of which we manage to budget monthly). At the start of every month, we withdraw a certain amount of money and that’s all we withdraw for the month unless there’s something absolutely dire that comes up. We take the money that we withdraw and put it in envelopes for different categories, including one for emergencies and another for medical costs (anything left over we save part of or sometimes spend), and I also pay death and disability insurance. That way, money accumulates in my bank account. Any extra miscellaneous money we get means we withdraw less next month. When I have a reasonable amount of money in my account, plus a buffer, I transfer it to my brokerage.
I would say our lifestyle is pretty frugal, but we’ve also simply adopted modes of living and entertainment that don’t cost a lot of money.
In terms of investing, I have a guy who handles it for me. I spent a considerable amount of time reading up on this over the past few years and was fortunate to be introduced to someone also of the Benjamin Graham school of thought on these matters. He does things so much better than I could/would, so I’m in no hurry to take over that side of things. In the past year, I made about twice from my investments than what I would have if I had been working full-time as a teacher the whole time. Will things continue so well? Undoubtably, there will be good and bad years, and yet his long-term track record is considerably better than the market, which doesn’t surprise me given that he’s a value investor.
Neither of my parents is in particularly great health, so there’s the distinct possibility that within a decade I could inherit enough money to instantly allow me to retire. That said, I’m not relying on that. The big unknown variable for me is children (but we’re holding off for another couple of years to see whether we move or bite the bullet and put down some roots here for a few years), but if I were to try to get a better job elsewhere so that we could still save the same as we do now, or maybe even a little more, and based upon pretty conservative estimates of how much my investments will grow by, it’s highly likely that by 45-50 (I just turned 35), I will be able to retire completely. If we stay here in Taiwan, maybe it will take a little longer. We want to raise kids with at least one parent at home, rather than have them looked after by strangers so we can rush back and forth to work. I’d be quite happy to get out of teaching other than doing a few privates for fun as I don’t particularly enjoy it. Ideally, I’d like to homeschool my children and do so spending a few years in a few different countries (anything outside the expensive developed First World) where I would probably work just to get a visa, keep myself occupied and pay the bills. That way, my children could pick up some more languages and experience different things.
Needless to say, I have a very different way of looking at the value of money to most people. Most people bleed away great fortunes 30NT at a time and are forced to make certain philosophical compromises in order to pay for such lifestyles.