How To Retire In 10 Years Starting With Zero

Lately I have been very interested in the topic of how to retire in 10 years with zero dollars saved up.

This is, at its core, a concept that is incredibly easy to understand.

In fact, it is so basic that I could probably summarize everything you need to know about achieving financial independence in the next 10 to 15 minutes.

Don’t believe me?

Just read this article for yourself.

But you are probably wondering if it’s so simple, then why isn’t everyone rich already?

Or why it is nearly impossible for 99.9% of the population.

Well that, unfortunately, is what we are going to be discussing today, because in reality, most people have no clue on where to begin and lack the resources that are available to them to stick with it long enough to actually make it work.

So let’s break down the common assumption that retirement is only reserved for those in their 60s, and go over the exact blueprint that has proven successful for many individuals, and how you can replicate a similar strategy that works even if you are starting today with zero dollars in your bank account.

Step Number #1

Step number one, when it comes to increasing your net worth and being able to retire, contrary to popular belief, it makes no difference how much money you make.

Of course, you might be thinking:

of course your income matters, because if I made 10 million dollars right now, I would be able to retire

but what most people don’t realize is when it comes to financial independence, it only matters how much of that income you get to save at the end of the day.

I can’t tell you how many people that are making $250,000 a year, are living paycheck to paycheck with nothing to show for it, because they spent it all on an extravagant vacation, a leased Ferrari, and a huge mansion that they could show off on Instagram.

On the other hand, I’ve seen people making $80,000 dollars a year, but saving half of their income after deducting taxes to the point where they are worth more over time compared to the other person that was making $250,000 dollars a year.

One of the proven ways that has been used by many to retire before their 30s is by living like you are broke, no matter how much money you made in a year.

The idea is that you would spend the exact same amount consistently.

No matter if you made nothing in a month or a hundred thousand dollars a month, you will keep your spending the same.

Okay, I get this might be extreme and it definitely isn’t for everyone, but the reality is if this is going to work, you have to pay close attention to your spending instead of your income, and that is the first rule of retiring in 10 years.

What most people don’t know is that based on your current income and expenses, you can calculate how long it’s going to take you to retire based on your current savings rate in less than a minute.

For example,

if you spend 100% of your income, you are never going to retire because there is always nothing left.
However, if you save 25% of your income, you will be able to retire in 32 years and maintain your current standard of living.
If you save 50% of your income, you will be able to retire in 17 years;
And if you save 70% of your income, you will be able to retire in eight and a half years.

Are you getting the idea?

The higher the percentage of income that you save, the faster you will be able to reach financial independence, and the faster you can do whatever you want.

For me personally, before I discovered this, I’ve always been a frugal person and was naturally a huge saver.

I never saw the point of wasting money or buying things that I didn’t need, instead I much prefer having the money and thus the flexibility of having money whenever I needed it.

There’s a saying out there that’s kind of basic but it’s so true:

the rich stay rich by living like they are poor, while the poor stay poor by living like they are rich.

Step Number #2

Speaking of your expenses, that leads us to the next point, which is cutting back for the sake of saving more money and moving up your retirement timeline, especially in the next 10 years you must do anything possible to save more money and live below your means.

Remember for every 5% of extra income that you save, you will be able to retire up to several years earlier, so every little bit counts.

Most people hear this and think of cutting back as being an extreme cheapskate or think that I want them to:

sell their car,
bike to work,
live in the middle of nowhere,
and grow your own food to live off the grid,

and yeah that's certainly gonna help, but I'm in the mindset that you don't need to go to such wild extremes to save money, and there are plenty of ways to cut back without staying inside and never leaving the house.

For example, the biggest expense we all have is housing, which can sometimes consume up to half of your income, however there's a much better option that would allow you to cut back or even save on this entirely and that's what's known as house hacking.

This is when you buy a multi-family property like a duplex, and then you move in on one side and rent out the other.

You could also buy a single family home with a guest house or maybe a basement that you could rent out to lower your cost of living, and typically when done right the other unit will cover the entire cost of owning the building and all of a sudden you get a free place to stay.

Now in order to do this, you do have to save up to 10 to 20 percent for the down payment, but you could leverage that payment for pretty much free housing for the rest of your life, plus even if you don't have the down payment right now, no worries you could also cut down on your cost of living by rent hacking, where you rent a house and then sublease out the bedrooms to cover your cost.

Even though you're not going to own the place, you could still save the difference and apply that money towards some of the next steps that we're about to discuss.

The other ways to save money are pretty straightforward:

Instead of driving around in a new car that depreciates rapidly, drive a reliable used car that isn't going to go down much in value;
If you're interested in travel, learn to utilize credit card signup bonuses and airmiles credit cards as a way to cover your cost of flights and hotels;
Make food at home instead of eating out;
And if you want to go shopping, wait for the item you want to go on sale, and no one knows the difference between a $5 shirt and a $50 shirt;

On top of that, there is one more way that you could save money.

Anytime you see something that you want to buy, just wait a week before buying it.

I found, at least for myself, 95% of the time the desire to own something goes away after about a day or two.

So just by waiting it out, you'll be able to understand the purchases that will actually make a lasting and impactful difference in your life.

Step Number #3

Third, if you want to retire in 10 years you absolutely have to stay away from high interest rate debt.

This is the kryptonite of financial independence and it goes hand in hand with cutting back and saving, but most people don't realize just how much high interest rate credit card, medical debt and student loans hold you back.

For example, you'll need to make 15 to 20 percent of your money every single year just to break-even on most unsecured debt, which realistically is not gonna happen, if anything, debt like this pulls you further and further away from your goal.

So in order to retire, high interest rate debt like this cannot exist in your entire financial ecosystem.

For myself, I make sure to never carry a credit card balance, I never finance anything I cannot afford.

To me, the only acceptable debt is something that makes you more money by not paying it off, like having a four percent mortgage on a rental property that makes eight percent, or taking out a three percent car loan when inflation is nine percent.

In those situations, taking on debt could actually accelerate your path to financial independence, but unless that debt is attached to an asset that's making you money, it's probably best to stay away.

Step Number #4

Step number four, besides cutting back and saving which is ultimately the foundation of financial independence.

If you want to retire in 10 years, you're also going to have to invest.

This is another very simple one in practice, although there are many courses that teach stock analysis going over unimaginable details, for most people, the optimal way to invest is to:

Simply take advantage of your 401k, Roth IRA and HSA accounts, because those save you money in taxes, and you can get your employer to match up to a certain percent.
Invest consistently long-term, just take a set percentage of your paycheck and throw it into the investments no matter what.
Do not try to time the market regardless of what the price is trading at.
Invest in a low cost index fund that covers the entire market, Vanguard, Schwab and Fidelity all offer really competitive rates so take advantage of it.
Just wait and let the market do their thing and long-term prices tend to trend up.

However, in terms of how long this is going to take you and how to accelerate that timeline, here's where things get slightly more difficult.

If you're starting out with zero dollars and your goal is to retire in ten years then you're either going to have to make a lot of money or spend very little money, pick one.

For example, if you're making 70,000 dollars a year you could theoretically retire in ten years if you live off of 21,000 dollars and consistently invest the difference, that'll allow you to live indefinitely with the same lifestyle after those ten years.

And of course you can always pick up a side job to make even more money or you don't even have to stop working if you don't want to, but you would never be obligated or need to work as long as you kept spending the same amount of money.

If you are able to do this, then you would have succeeded, voila, mission accomplished!

What If You Don't Want To Live Off The Bare Minimum?

But assuming that you don't want to live off the bare minimum and you want to live a middle-class lifestyle after 10 years, then the truth is you're likely not going to get there by working a traditional job, unless that job is paying you a ton of money.

Now if you are making a lot of money, then congratulations, it just comes down to you living frugally and saving 65% for 10 years and you're done.

Although for everybody else out there who wants a shot at retiring in 10 years and making a lot of money, my advice is to work a career that pays you based on results and not your time.

The biggest problem that I see with getting paid with your time is that there's only 24 hours in a day, so eventually you're gonna hit a ceiling in terms of how many hours you're able to work and how much money you're able to make.

On the other hand if you get paid on results and not on your time, then hypothetically you should be able to find ways to streamline that to make more money without working any harder.

For example, if I worked as a sales agent, the number of hours I worked would be totally irrelevant.

I only get paid when I make a sale, and that gives me more leverage to make more money because I would focus more on the hottest products that are selling fast and can earn me the highest commission to make the most money.

The work really doesn't change and now I'm making significantly more without necessarily increasing my workload.

It's really essential to work in a career where you can leverage what you do to make more money without spending more time.

The second, one of the things that really stuck out to me in the book: The Millionaire Fastlane, was just this, think like a creator, not like a consumer.

Instead of buying jackets, go and design jackets;
Instead of watching TV, go create your own movie series.

You get the idea, you need to begin creating value in building something, instead of consuming it.

What If It Doesn’t Work?

Now what about everybody else who doesn't make above 50,000 dollars a year, because let's be real, if you're already saving as much as you can and you have no discretionary income left over, then the only focus is that you have to increase your income at minimum.

By learning a new skill, shopping yourself around the job market, or taking on a side hustle, at the end of the day retiring in 10 years is all about the numbers and even though your spending tends to be the easiest to control.

To point you in the right direction, your income is the speed at which you hit that target, so by lowering your spending while increasing your income you could work backwards to a target retirement date in 10 years without being any more complicated than that.

Now I know this might seem obvious to many, but this is the simple truth, you must make enough money to save 65 to 90 percent of your income for an entire decade, and at the core that's how you're going to be able to retire in ten years.

I understand that it's not for everybody and the idea of retirement sounds miserable to some people but for me that just means I have the choice to pursue the work projects and passions that I'm the most excited about, not that I am going to stop working entirely to then just relax all day and do nothing.

To me, that's what early retirement is all about, if that's making more money, great;

If it's spending all day on YouTube, that's okay too!

- Ivan