Saving Secrets of 28 Year Old Who Retired With Over $2 Million

After seven years of working in the corporate world, one New York City-based twenty-something had a nest egg big enough to retire early.

She goes by the pen name J.P. Livingston on her blog The Money Habit, where she discusses how she had financial independence on the mind from an early age. When she was only 12, she picked up a copy of the personal finance classic “Rich Dad, Poor Dad,” which sparked her interest in saving and investing.

When she realized she could save big by finishing college in three years, she jumped on the opportunity. Graduating a year early “really helped me financially,” she tells CNBC Make It. “It saved me a year of tuition and gave me a year’s worth of extra income, and between the two things, that’s a $150,000 net worth swing.”

After graduating, Livingston took a job at an investment firm, where the starting pay was $60,000, plus an end-of-year bonus that was almost the same amount. Total: just over $100,000.

After seven years of stashing more than 70 percent of her income, which increased over the years, she built a nest egg of $2.25 million, 40 percent of which came from investing and 60 percent from saving. It was enough for her to quit and settle down at age 28.

Today, she lives in New York City with her husband, who still works, and dog. They live off a modest $65,000 per year, which allows them to maintain a high savings rate.

Livingston made a lot of money, but she also used a variety of strategies to save big over the years…

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Retire Earlier By Not Overspending On These Three Things Most Blow Their Income On

Retirement might seem light years away, but it’s guaranteed to be even further.
Saving enough over a 40-year career to maintain your lifestyle in retirement is challenging. But there’s a lot to be learned from the people who have managed to hit their savings goals well before that point, even if you haven’t been bitten by the early retirement bug yourself.

Grant Sabatier, a 30-something self-made millionaire, and founder of Millennial Money, pointed out on his website that the average American spends 70% of their money on housing, transportation, and food (not including income taxes and Social Security).

Sound familiar?

In some parts of the country (hi, New York and the rest of the Northeast), the percentage spent on housing, transportation and food can be even higher. That might leave you feeling defeated before you even start saving, but for Sabatier and others striving for early retirement, it’s an opportunity. Here’s Sabatier:

“If you can spend less on [those expenses] (say 25% or so) then you can bank the difference. If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher,” he wrote on Millennial Money.

To do this, you might have to get creative. But there are some guidelines you can follow.

Housing
If you’re part of the one-third of Americans who overpay for housing, start by looking for a place that meets the standard measure of affordability: 30% or less of pre-tax income. But to really make progress on your savings goals, you’ll want to limit it as much as you possibly can. If you can find a place that allows you to spend 25% or less of your after-tax income on housing, your savings account will thank you.

Even billionaire Warren Buffet keeps his housing costs low. Buffett lives in a modest house that’s worth .001% of his total wealth.

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Dr. John Beckem: How To Eliminate Debt So You Can Start Investing & Building Wealth

In the segment below, Personal Finance expert Dr. John Beckem gives an overview of what it takes to eliminate your debt and put systems in place that will lead to wealth building that can be sustained from generation to generation.

You can sign up for the Debt Elimination Blueprint here:  https://goo.gl/enxAmi

Dr. John Beckem is a Personal Finance Expert, Educator & Consultant.  He helps middle income individuals and families free themselves from debt and build generational wealth.