Money

Early retirees agree on the crucial first step to achieve financial freedom

Contrary to popular belief, retiring early is more than possible. And as a handful of everyday people have shown us, you don't need to win the lottery or bring home a massive paycheck to do it.

Take early retirees Justin and Kaisorn McCurry, who banked more than $1 million in a decade to retire in their 30s. Or, "Mr. and Mrs. 1500" — the pseudonym of early retirees Carl and Mindy — who upped their net worth from $586,000 to nearly $1.8 million in four and a half years, thanks to cutting expenses and smart investing.

Both the McCurry's and Mr. and Mrs. 1500 started their path to financial independence with one, simple step: They tracked their spending.

The McCurry family
Courtesy of Root of Good
The McCurry family

"You have to know what you are spending before you can plan your retirement budget," says McCurry. Plus, "knowing how you spend lets you determine whether you get value for your dollars, and where you might be able to focus efforts to reduce expenses further."

He prefers using Personal Capital to track expenses, but there are other sites that do a similar thing, including Mint and You Need a Budget.

You can also keep a spreadsheet on your computer or record your purchases, which is what Mr. and Mrs. 1500 did. "My wife and I wrote all of our expenses in a book," Carl explains on the couple's blog. "Every time we returned from shopping or paid a bill, we logged it."

Based on their logs, they determined how much they could live on a year: about $24,000. To be safe, they added $6,000 and bumped that estimate up to $30,000 a year.

Mr. and Mrs. 1500
Source: Mr. and Mrs. 1500
Mr. and Mrs. 1500

In addition to helping the couple determine their retirement budget, recording purchases made it easier to cut costs, as it allowed them to see exactly how much money they were spending and figure out where there was room to save.

"You'll be surprised," say Mr. and Mrs. 1500. "We started doing this and were like, 'Wow, we spent that much on groceries? What were we thinking?' After you do that, evaluate every one of those line items and see how you can cut those down."

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