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<title>Early Retirement Extreme Strategies - Adam Richard's web page</title>
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<h1>Early Retirement Extreme Strategies</h1>
<p><a href="https://earlyretirementextreme.com/">Early Retirement Extreme</a> is a philosophy with the goal of being financially independent. That means reaching an amount of money such that the interest on your investments cover all your expenses, letting you survive "forever" without needing to work (like your own "Universal Basic Income"). Because of the math of compound interest, saving a large percentage of your income lets you reach this point much, much quicker than saving a normal percentage. So the idea is to reduce your expenses. You can of course also use these strategies for other goals, such as to work less (as I've done), or to get through a pandemic, or even just to survive.</p>
<p>Especially, it's important to realize how much of a difference there is between buying something regularly that's consumed, buying something once that's consumed, and buying something that generates wealth. Eliminating regular expenses for things that are used up has the biggest impact. E.g. a lot of people treat a $40 per month cable bill as not a big deal, but treat a $5000 heat pump as a big deal. However, the cable costs you /way/ more - the heat pump actually earns you money. Even comparing a $40 cable bill to a $1000 TV (a one time cost that is consumed), after 10 years the cable will have cost you $4800 plus interest, and the TV only $1000 plus interest.</p>
<p>The first thing to do is ask yourself what activities you do or want to do in your life. E.g. for me I work at a computer, read books, play video games, go hiking, go biking, play sports, visit friends and family, play board games, eat, sleep, etc. Then ask how you can accomplish the goal of spending your life doing those things (rather than thinking about what stuff you need to buy). If you already have stuff that you know won't help you do the things you want, get rid of it. Doing so might seem like a waste of money, or, if you sell it, it might seem like you're not getting much money for it, but the important point is that the value of getting rid of this stuff is much greater than the price you get for it, in terms of the space it saves and the reduced stress from reduced clutter. Remember, by compound interest, even emptying a room in your house, which might allow you live somewhere, say, $200 per month cheaper, is an enormous amount of money (over $100000 over your lifetime).</p>
<p>Some specific strategies which have helped me reach an ERE level of spending are:</p>
<ul>
<li><p><b>Transportation</b>: Biking and walking, no private vehicle. Take bus / taxi or rent a car occasionally. If this seems like too much for you, start by at least biking / walking to work, or somewhere useful every day if e.g. you work from home. This saves way more than the cost of gas. Health is a form of wealth too. After making that switch you can see how often you drive and compare the cost of your car to the cost of the taxis you'd need. For me, this was by far the single biggest choice that saved me a ton of money.</p></li>
<li><p><b>Housing</b>: Rent a room instead of an apartment or buying a whole house for yourself, or be a landlord. Live in a smaller space by reducing clutter to save rent / house cost. Do your own renovations as much as possible (I've done flooring, drywall, painting, etc). Even if you insist on living in a whole house, a smaller one saves way more than the reduced cost of the house: it also has lower property tax, insurance, repairs, and electricity. Living centrally, though more expensive, is usually worth it if it prevents you from needing a car, though living non-centrally and not going places very often can also be even cheaper, if you prefer that lifestyle.</li>
<li><p><b>Food</b>: Avoid restaurants. Avoid food waste and eat food that would be thrown out. Avoid desserts and unhealthy food and unneeded things like coffee, tea, alcohol, cigarettes, etc. Make things from scratch, e.g. sauces and bread. Cook things from basic ingredients. Gardening can save some money too, but due to the time investment it's probably mainly a hobby, but it's still worth it due to the things you learn and the better tasting food you get. A deep freezer probably isn't worth it, but if you have extra freezer space or can use some of someone else's freezer space, then you can preserve food from harvest time through the winter, or any time there's an abundant cheap source. You can also preserve fruits and vegetables without freezer space by making things like canned fruit, fruit leather, tomato sauce, or salsa. Some people say that healthy food like vegetables are expensive, but in determining the cost of food, it's important to use the price per nutritive value rather than the price per calorie (remember that health is a form of wealth). With that metric, vegetables are definitely a bargain. And there are lots of healthy cheap foods: rice, flour, carrots, potatoes, apples, tomatoes, etc.</p></li>
<li><p><b>Events</b>: I mostly go to social events without concern about the price, however I usually avoid things like movie theatres and sports games where I could watch them at home much more cheaply, or gym memberships to workout because I can run and lift weights for free. These things aren't really social anyway. Aside from them, fun events often seem to be cheap or free.</p></li>
<li><p><b>Kitchen stuff</b>: Avoid disposable products such as paper towel or disposable cloths. Avoid gadgets that are just used for one thing rarely. Just have basic things like utensils, dishes, knives, pots and pans which can be found cheaply at yard sales. Have only a few things to save space.</p></li>
<li><p><b>Electronics</b>: Use older electronics that are cheap or free since things become obsolete so quickly. Learn to assemble and repair desktop computers to get the most out of them. Learn to configure software and find good software that works well and does what you want on older hardware.</p></li>
<li><p><b>Media</b>: Get books and DVDs from the library, or borrow / trade them, or share a digital media subscription service. Another thing to keep in mind is that you can only watch / read / play one thing at a time. So if you first finish all the things you already have, then get one new one at a time, then you'll tend to have no reason to pay full price for new releases.</p></li>
<li><p><b>Clothes</b>: Dry clothes on a clothesline to make them last longer and to avoid the cost and energy use of a dryer, or on hangers or a drying rack. Avoid getting new clothes for the sake of fashion or appearance, use them longer, and buy them used. Sewing / darning some clothes can save even more money, but I find clothes cost me very little anyway if I just keep wearing them long after they look unstylish. Instead of an expensive winter jacket, wear many layers.</p></li>
<li><p><b>Personal care products</b>: Avoid buying consumable things such as perfume, cologne, hair gel, mouthwash, etc. These kinds of products cost money per month and those costs add up. For soap, bar soap is much cheaper per use than liquid soap, and avoids the plastic as a bonus. You can get shampoo bars and laundry soap nuts too. For deodorant, baking soda works better and is cheaper (1/8 tsp baking soda + 1/4 tsp water) - and for many people, skipping deoderant altogether, and just changing your clothes and showering after exercising, may be sufficient.
<li><p><b>Cleaning</b>: Instead of cleaning chemicals, vinegar and water, or even just water, work fine. For stuck on dirt that won't come off with just water, add a bit of baking soda (or borax works a bit better, but not much) with a bit of water mixed in, and let it sit before scrubbing. Instead of buying special cloths for cleaning surfaces, use rags from old clothes. See also <a href="https://davidsuzuki.org/wp-content/uploads/2017/10/queen-of-green-green-cleaning-recipes.pdf">this</a> guide for more ideas for cleaning without buying expensive chemicals.</p></li>
<li><p><b>Services</b>: Avoid services that cost money per month as much as possible. Cable isn't necessary - it's better to buy DVDs, and better still to borrow them. I have gone without internet or cell phone at some points, but I think it's reasonable to get basic internet and a cheap cell phone plan, and no home phone. For banking, get a no-fee banking service. Cut your own hair. Etc.</p></li>
<li><p><b>Travel</b>: I'm "fortunate" in that I hate travelling in a car, plane or bus, but even if travel is important to you, ask yourself what about it you like. If it's new experiences and sights, then rethink whether there's somewhere nearby where you can see and experience new things. In a day long or multi-day bike ride around your province / state / area, what tourist attractions exist? The closer you stay to home, the more money you save. If you must travel far, there are cheap places to stay while doing so (e.g. I've done WWOOF before), but the cost of transportation is still an issue, and unless you can find a way to avoid paying your housing costs for your home, it will still be more expensive than staying home. Getting food without going to restaurants and sleeping without going to hotels is difficult when travelling, but doable. Camping is another good alternative (though I personally would just as soon go hiking and sleep in my home).</p></li>
<li><p><b>Energy</b>: The biggest cost savings that everybody can do is turn down the temperature in the winter and turn it up in the summer. If you wear extra layers in the winter you'll still be comfortable. I've gone most of my life without air conditioning. Heat pumps are a more efficient air conditioner, and better yet, the dehumidify mode on a heat pump uses much less energy than the air conditioner mode, and still makes it feel much cooler on a hot, humid day. The problem with always having your house at a constant temperature is that you become dependent on that temperature and then going outside feels unbearable in certain weather. This causes you to feel like you have to drive places in certain weather, and then you're in a downward spiral towards a restrictive and less happy life.</p>
<p>The second biggest change that everybody can do to save electricity is probably short showers or cold showers. Hot water is expensive. You can also use cold water instead of hot when washing your hands (the water doesn't get hot enough to kill germs anyway - it would need to also burn you to be that hot). Similarly, you can use cold water in your washing machine (or to wash clothes by hand), depending on the type of detergent you use and cold water to rinse dishes (there's a slight benefit to warm water to wash dishes - it helps remove oil more easily). If you've managed to reduce your hot water use, then consider a tankless water heater, especially if you need a new water heater anyway - water heaters with tanks use continual energy to keep the water in the tank hot, whereas tankless ones only heat up on demand. If you're wondering how old and inefficient your water heater is, feel it; if it feels warm, then heat is being lost from it being old and inefficient. Putting a water heater blanket around it can mitigate this until you replace the whole unit.</p>
<p>Homeowners can of course also get free money by doing energy efficient upgrades. Even LED light bulbs are free money, even if you throw out existing light bulbs.</p></li>
<li><p><b>Furniture</b>: I've had many opportunities to get free furniture because other people don't have the space for it. Even having to buy used furniture occasionally isn't a big deal - the important thing to do is minimize your furniture, primarily to save space, which is much more significant than the cost of the furniture itself. I find that as long as I don't care about appearance, the cost of furniture is negligible. You could also build some furniture yourself to save further money, but I've never needed to.</p></li>
<li><p><b>Finance</b>: If you know people that you trust well enough, lend them money or borrow money from them instead of going through banks or investing it in the stock market. Not only do you each get a better interest rate (by eliminating the middle-man of the bank), but (depending on who you lend to / borrow from) you could reduce the harm your money does. I wrote a program to manage the calculation of interest for such loans, which you can get <a href="loans.html">here</a>.</p></li>
<li><p><b>General strategies</b>: Borrow or trade things, especially things that you only use rarely, or buy something, use it, then sell it. Some cities even have tool libraries. Buy things used. Buy things that last a long time, even if they're more expensive, rather than cheaper things that have to be replaced regularly. Stock up on things on sale if you need them, but be careful not to buy things you don't need just because they're on sale. Learn skills and make things yourself. Think of ways to do without things.</p></li>
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