In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 3rd decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
Billy and Akaisha Kaderli
High above Lake Atitlan,
No matter what stage of
life you are in, it is important to know your financial health. This is not
something you do just around
income tax time but throughout the year. It's good to check in at least monthly or, as we do,
daily. The same
as any successful business must know their income and liabilities, so should you.
Today there are plenty
free online tools which can help you, but we are old school and prefer to be able to
check and edit our data anywhere in the world and at any time regardless of an
internet connection. We have done this since we retired in 1991. Back
then we used a paper notebook and pen, but today we created
a spreadsheet using
an Excel program that is on most computers sold.
How it works
Throughout the day as we
spend money we keep a mental note of the cost. Then, usually in the evening while
winding down, we enter the data into our spreadsheet. We created categories such
as housing, food, dining, transportation, donations, healthcare, and so on. Each of
those entries then gets automatically added giving us a total for the day. That
number is added to all of the previous entries and then divided by the day number in
the year, 1 through 365, giving us a daily average.
Guide to Early Retirement, 3rd Edition
A Common Sense Approach
Utilizing this system we
can adjust the entries using local currencies, therefore knowing what we are
spending in Mexican Pesos, Thai Baht, Vietnamese Dong, Guatemalan Quetzales or
the money of any place where we are traveling. While this figure can easily be converted
to dollars if we want, we prefer to think of our costs in the currency of our host
country. This keeps our spending at the perspective of the natives instead of
distorting it by thinking in Dollars.
This information is
Once you know how much
you are spending per day you can utilize this information to adjust spending
accordingly if necessary. You are in control of your outflow at this point, and
you can make changes in real time.
Net worth; What is it?
Another important tool
for understanding your financial health is calculating your net worth. This
number is derived
by adding up all of your assets minus your liabilities. Do you own a house or
rentals? Figure out what they are worth then subtract out what you owe and this equates to the equity you
have. It is important to use realistic numbers knowing that if you sold today,
there would be fees and expenses involved as well as taxes to be paid. Do you
Even though they are a depreciating asset, meaning they lose money over time,
you still have some value there. How about retirement accounts? IRA’s, 401K’s
and regular banking and brokerage accounts, credit card and student loan debt,
all need to be factored into the equation.
This information is a
powerful retirement tool
Now that you know your
net worth and what you are spending per day, you can take further control of
your future by figuring out what percentage of your net worth you are spending. This
is calculated by multiplying your daily expenses (the number you obtained above) by 365 and dividing this figure
by your net worth. The general rule (called a Safe Withdrawal Rate) is that if your percentage is 4% or below
you should be able to sustain your retirement well into the future and, in fact,
increase your net worth above inflation. This is assuming that you cashed out
all of your assets and invested the proceeds into a balanced portfolio of stocks
and bonds. This is basically what we did.
Many financial planners,
brokers and online tools like to complicate this calculation by muddying the
waters with fancy colorful charts, graphs and financial-speak. While some might
be attracted to this approach, we find all this rigmarole unnecessary as we
prefer to use the KISS system: Keep It Simple Stupid. We have been keeping
things simple and have been managing our finances successfully for twenty seven years of
If we can do it, so can
About the Authors
Early Lifestyle appeals to a different
kind of person – the person who prizes their
independence, values their
time, and who doesn’t want to mindlessly
follow the crowd.
Retire Early Lifestyle Blog
About Billy & Akaisha