Frequently Asked Questions

I am increasingly getting questions on the blog and on email. I do my best to answer all of the requests, but below I have tried to capture an answer to the most normal questions I get – both on and off the blog. If you have other questions, please feel free to contact me anytime!

How can you save up to 60-80% of your income without suffering? I can hardly manage to save up 10% per month!

There’s two key reasons.

The first reason is that I have a good salary, and I realize that not everyone can have that.

BUT! The second reason (and definitely more important) is that I have a strong budget and focus on my expenses – if you have a lower salary than me, this is even more important. Don’t think it applies to you? I have seen several cases of people on minimum wages that have managed to save up 60-80% of their income. It might require you to make significant adjustments to your current lifestyle, but I promise you that it is possible. By following this blog frequently, you should get a pretty good picture of what to do and how to do it.

It is easy for you to retire early because you have a high salary, but how should I ever be able to?

You are right – and very wrong. All else being equal, it is easier for me, yes. But even though I am saving a lot (and are very cost conscious), I also spend some money on ‘nice to have’ things. If you have a lower salary, I would advice you to cut away this – I know that I could easily cut it away or find good (free) alternatives. But since I do not have to spend less in order to keep on track to early retirement, I have decided to still spend some money on ‘nice to haves’.

Becoming financially independent and being able to retire early is something that requires hard work and it will require you to make sacrifices (I do not necessarily see sacrifices as a bad thing). If you have a higher salary, you can either save even more money and retire even quicker, or you can spend some extra money on ‘nice to haves’ and still retire quickly. If you earn a lower salary, you have to cut away ‘nice to haves’ in order to still retire quickly. See my budget if you want to know what I consider ‘need to haves’ and ‘nice to haves’. The first group is always necessary, but can nearly always be reduced (however, it might require you to change your housing situation or readjust your food habits). The second group can always be cut down to zero – always.

How much money do you have and how much do you need to retire early?

You can see how much money I have in my monthly journey updates – I need approximately 4,500,000 DKK (643,000 USD) to retire comfortably, but I could most likely retire on a lot less.

What do you mean by ‘early retirement’?

To me, early retirement, financial independence and “being able to do what I want” is the same thing. I want to be able to control my own time, but of course I do not want to retire and watch TV on the couch all day. I am not striving towards a non-existence without doing anything or seeing anyone, so I will most likely do some type of work, but only work on what I want and when I want. Besides, working is more fun when you don’t need the money. Other than that, I’ll spend a lot of time on my friends and family (so I can be a super dad when the time comes!).

Is ‘early retirement’ just a nice word for ‘being lazy’?

No, I have never been lazy, nor do I think I will be. ‘Early retirement’ might mean ‘being lazy’ for some people – not for me.

Why should I retire early if I like my job and current lifestyle?

If you like your current job and lifestyle, please continue living like you do! If you like your current job, just know that working is more fun when you don’t need the money. It is about having choices available. How would you like the opportunity to take 6 months off to travel or spend time with your kids at your own convenience? Being financially independent means that you can make the choices you want without being dependent on somebody else’s (usually an employer’s) decisions.

What sacrifices do you have to make to save that much money?

I don’t think that I have made any sacrifices – you are the one sacrificing your work week for money to buy the newest technology, designer furniture and fancy clothes. I am sacrificing consumption of dead things for the possibility to do exactly what I want all day long. I do have to prioritize how I spend my money to a higher degree than most people do. I do have to learn to live more with less. I do have to stop consuming to the degree that is common in today’s world. I have shifted my mindset from being a regular consumer to realising that you don’t need things – and changed my thinking about which things you need. I have been doing this for some time now, and I feel like I live the exact same life as my friends – except I might not have the newest, fanciest clothes or furniture, but I still have the same amount of life quality as they do (and maybe even a more positive state of mind because I will be retired at 33 – approximately 35 years before most people). I do not see my choices as sacrifices

Why would I even want to be retired when I am in my 30s?

I thought I had answered this by now! I want to be able to do what I want when I want – not doing nothing. I might work, I might volunteer, I might get a hobby, I might get a family of 10 – I don’t know, but I know that I will have the ability to choose any of those.

How can you retire or have financial independent if you have less than a million dollars?

You don’t need a lot of money to retire – many people in the community retire on far less than a million dollars. In fact, how much money you need is defined by one thing alone: your savings rate. The more you are able to save per month, the less money you need to retire. Sounds weird? I have explained it here.

With your degree and job, you could make so much more money throughout your life – why don’t you do it?

Yes, I could, but I don’t need the money – I need the time that is usually sacrificed for money. In the first year of graduating from business school, I was making more money than I knew how to spend in a month (of course I could spend it, but I didn’t see the need). In my early retirement or financial independence, I don’t need the money either. Getting a higher salary often comes with more hours spent on work or thinking about work. So why bother? That being said, if I can increase my salary substantially in the time spent on accumulating wealth, I will of course pursue those paths.

How can you save that much money when you also have kids to feed?

Good question – I don’t know, because I don’t have kids. But I know of plenty of people in the community that succeeds with feeding their kids and pursuing the path of being early retirees – or already are.

Why do you think that everyone wants to live like this?

I don’t and I have never tried to persuade anyone to choose like I do.

How are you investing your money?

I am by no means an investing expert, so I have compiled a portfolio of assets based on what I have studied, read and heard might be good. I am a quite passive investor and only put money in one asset each money, but I do believe I have a quite high risk portfolio and most people would tell you to include a larger share of bonds/precious metals/real estate index funds – I might at some point. I have tried to get index funds with the lowest possible administration costs in Denmark. For now, I have the following portfolio of assets:

  • Cash in the bank of 50,000 DKK (I get 5% interest rate up until 50,000 DKK, which is a quite sweet deal these days) – not included in percentages below
  • Stock index fund: Global stocks with minimum risk (following MSCI Minimum Volatility Indexes) – 30%
  • Stock index fund: USA Growth Stocks – 20%
  • Stock index fund: USA Value Stock – 20%
  • Peer-to-peer lending: (Eastern) Europe – 20%
  • Bond index fund: Danish Stable Bonds – 10%

Every month I look at the value of each asset and then I see which of the assets are furthest away from the %-target, and then I invest in that one.

Other questions? Just shoot me a message!

Onwards,
Carl