People really want to know what I’m doing with my life when they find out I retired early at 25. They assume I must have had a high powered job and made gobs of money. After all, that’s the only way someone could possibly afford to walk away from it all in this still tenuous economy. In fact, I have to give a special thanks to my dank basement. Without it, I would still be sitting at a cubicle.
To Retire Early, You Need to Radically Control Expenses
What is the largest line item on your budget? For virtually everyone, it’s going to be housing. Even if you have gobs of student debt, the federal government now limits payments to a percentage of your income. Moreover, if you decided to lease a new Lexus, you might be able to keep your monthly payment below $500 a month.
Unfortunately, most people are suckers when it comes to housing expense. “I just want a safe place to live,” or “I’m tired of having roommates” are common justifications for spending a lot on rent. When I started working, several colleagues signed up for a 1 Bedroom apartment right in the middle of the city at a cost of $1500 a month. In contrast, I roomed with 4 other guys in an old house close to work and paid $300 a month. Additionally, the folks who chose the 1-bedroom apartment shouldered all the costs of utilities by themselves. I shared these expenses with my four roommates.
All in, my total cost for rent and utilities in my first year of work averaged $400 a month. Other people spent upwards of $1700 a month, not including the cost of brand new furnishings and fancy clothes for work to fill their walk in closets. As a result, I saved $15,600 more than they did in the first year of working. If you layer on other spending categories on which I also spent a miserly amount, and I put away about 60% of my salary plus bonus in my first year of work.
The Dank Basement I Lived in Was the Pinnacle of the Cost Control that Propelled Me to Early Retirement
The problem with living with five guys in one house with one bathroom is eventually people get upset and want to leave. I don’t blame them as they wanted a traditional lifestyle. We lost two of the five guys during the course of the lease. A third moved into the city for fancy living. The fourth roommate decided to move in with some other guys from work. I was in a tough spot. I had nowhere to live, no Craigslist room shares that looked appealing, and a lease that was running out.
My fourth roommate from that first year is a great friend of mine. The other two guys he would be living with were real cool too. He told me that they had a basement that I could check out and see if I was truly desperate. I went over and walked down the stairs. At first, I was a little shocked, as it was only partially finished. It had a washing machine and dryer in the room. It also had a deep sink that you’d use to wash clothes in. On the upside, it had its own door opening to the outside and a window, so there was natural light and a way for ventilation.
I asked them for a deal and they gave one to me. I only paid about $350 a month, which included all utilities. I owned my own clunker car, and it was worth so little that I dropped collision insurance. Living in this dank basement during my second year of work allowed me to save about 65% of my income. The stock market rose about 30% during this time frame as well, and my total net worth increase was about 100% of my annual salary.
Living in My Dank Basement Forced Me to Embrace Minimalism
At one point shortly after I moved in, we had a heavy rain. The water main to the apartment complex broke and flooded my new “room.” Perhaps it runs in the family as my brother got flooded out of an apartment once too. The guys I lived with brought down the snow shovel and helped me push the water out of my dank basement. They called the emergency repair guy who crawled under the building and turned off the water.
A fair amount of my stuff got ruined. However, the destruction blessed me. I realized that my life was just as good without these items as with them. The flood allowed me to purge all the clutter I had carried with me the past several years. The rising waters obliterated the things I did not truly need. The repair guy brought in a commercial dehumidifier so nothing important got damaged.
Everything I carry with me fits into a duffel bag and a roller bag. I also keep four bins of stuff stored at my parents’ house. These items encompass all my worldly possessions, aside from the bank and investment accounts that sustain my day to day living. I don’t believe I would ever have been able to come to peace with extreme minimalism if my dank basement had not forced it on me.
Thank You Dank Basement for Freeing Me from Corporate Serfdom and Creating Millennial Moola
If I had followed the way of the world and signed a lease at a fancy apartment, I would still be waking up at 545am each morning to go in to trade bonds. Without the financial security the dank basement gave me in 2013-2014, I would not have retired at 25. Millennial Moola would have never existed as my employer had a strict policy banning financial blogging.
My dank basement will always have a special place in my heart. I prefer to never go back there, but it taught me how to happily live in conditions other people view as extreme. I radically limit my expenses, travel where I get the best deals, and share expensive resources like cars, housing, and utilities.
What is your dank basement in life? Do you have an example of a sacrifice you make in your lifestyle so you can gain financial independence and freedom from work? Share below!