10 ways to retire earlier than friends on the same salary

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The notion of early retirement is all the rage, with books and blogs devoted to the idea of quitting work while you are still young enough to enjoy life.

If you are not lucky enough to work for a company that provides a pension, self-funding an early retirement may seem daunting. But it can be done.

The key is to understand that the decisions you make are at least as important as the amount of money you earn. If you want to retire early — or at all — keep these suggestions in mind:

1. Marry or partner with the right person

A significant other can give you such a thrill, but love won't pay the bills. Although it's not unheard of for people to ask about credit scores on the first date, you probably shouldn't push it quite that hard.

However, talking about other goals and money management habits can be fine fodder for those getting-to-know-you chats.

As the relationship heats up, you need to talk frankly about finances. If the object of your affections is vague about future plans or careless about spending, ask yourself whether you want to do all the heavy lifting when it comes to cash.

2. Don't be in a rush to pair up

So what if all your friends from high school or college are getting engaged? That is no reason to rush into matrimony. Keep your eyes wide open with regard to financial as well as personal compatibility.

You want to pair with someone with whom you can share goals, and who is willing to do what it takes to achieve them.

Love makes it easy to overlook red flags such as careless spending patterns, high debt load and an inability to plan for the future. The old saying "Marry in haste, repent at leisure" has a lot of truth to it.

3. When you do pair up, stay that way

Many relationships have rough patches. Be prepared to work through them. Put bluntly, divorce is expensive as well as traumatic. It might also be unnecessary. Some problems that feel insurmountable can be overcome through couples counseling.

Unless your safety or your long-term financial well-being is at stake, remember why you married that person and work hard to work it out.

And if you do wind up splitting? Please, please read "10 Financial Moves That Keep You Sane During a Divorce." What you learn could make the difference between solvency and despair.

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4. Don't have kids too early

An unplanned pregnancy can take a major toll on your finances, and even on your emotional well-being. That is especially true if it turns out that the person you thought was Mr. or Ms. Right is the wrong fit.

Even if you plan to wait to have children, remember that a surprise pregnancy is always a possibility. That's another reason you need to be on the same financial page with your beloved. The more organized your finances are, the more likely you will be able to cope with an unplanned pregnancy.

5. Consider a smaller family

"How many kids should we have?" is a good question to discuss before you get married. Some people opt for only one or two children due to the high cost of raising them. Others keep their families small because they feel fulfilled and happy with producing only a couple of outstanding new citizens.

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Remember, it isn't just a question of whether you can feed and clothe more than one or two children. Family size can also affect:

  • Your mortgage. A two-bedroom starter home won't be large enough for your version of "The Brady Bunch."
  • Your car payment. You cannot tote five kids in a compact car.
  • Your retirement. If one parent takes a lot of time off to raise kids, he or she will likely put a lot less into both Social Security and any personal retirement program.

6. Be aware of the true cost of at-home parenthood

Some people feel strongly about having one parent — usually Mom — at home full time for years and years. According to personal finance expert Liz Weston, the average annual earnings for women who leave work for up to three years decline as much as 30 percent overall. In addition, these women may have trouble getting jobs if they stay out for too long.

While quitting a job might be the right choice, Weston emphasizes that you should not do so simply because child care costs too much.

"For a few years, those costs might eat up most or all of your paycheck, but such expenses decline over time," she says. "If you continue to work, your earning power and retirement contributions will continue to grow."

For tips on keeping as much of that paycheck as possible, see "10 Ways to Reduce Ridiculously High Child Care Costs."

7. Live in a cheaper area

Sometimes you don't have much of a choice about housing if your work is in New York or Los Angeles. But today isn't necessarily forever; maybe you can find work in your field in a less-expensive area.

Look for ways to cut the cost of housing. You might move a little farther away from work, as long as the additional commuting expenses will not cost more than potential rent/mortgage savings.

Perhaps you can take in a roommate or two. Even married couples sometimes rent out a room to help ease mortgage costs.

8. Don't keep up with the Joneses

Why should marketing experts determine how you live? Champagne tastes on a Kool-Aid budget will translate into debt that might keep you from ever retiring.

Put another way: The Joneses might be up to their hairlines in debt. Still want to be like them?

That's especially true when it comes to cars. Maybe you want a sweet ride that leaves others in the dust — and makes them feel envious to boot. The higher cost of a luxury or sports car plus the higher cost of auto insurance will siphon tens of thousands of dollars from your wallet, and that's money that could otherwise be growing in your retirement accounts.

9. Take calculated investment risks

Diversify your retirement investments. Stocks and real estate involve some risk, but over the course of decades they historically have returned more than safer savings accounts.

For more information, see "Why You're Stressed About Your 401(k) – and How to Get Over It."

10. Build an emergency fund

You need an emergency fund. Period. That cash will help you fix a car, replace a broken appliance or pay for a pet's illness. And you will avoid putting those costs on a credit card or borrowing from your 401(k).

Feel that it's all you can do right now just to fulfill current obligations? Get stealthy in your savings; "10 Ways to Save When You're Making Minimum Wage" is a good place to start.

Do you have tips for saving money so you can retire early? Share them by commenting below or on our Facebook page.

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